If all firms in the industry are the same as the monopolistically competitive firm shown,the long run will reflect

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Quizplus · Accepted Answer

In the long run, monopolistically competitive markets tend to have zero economic profit due to the entry and exit of firms. If firms in the industry are earning economic profit, new firms will be attracted to the industry, leading to increased competition until economic profits are eroded to zero. This process does not lead to all firms leaving the industry, nor does it ensure that all firms earn a specific amount of economic profit such as $300 per day. It also does not result in a situation where some firms consistently earn positive economic profits while others incur losses, as the market dynamics encourage adjustments towards zero economic profit for all.

If All Firms in the Industry Are the Same as the Monopolistically