A monopolistically competitive firm that earns an accounting profit in the short run
A)must also earn an economic profit in the short run.
B)does not earn enough to earn an economic profit in the short run.
C)could earn an economic profit, break even, or suffer an economic loss in the short run.
D)could earn an economic profit or break even, but could not suffer an economic loss in the short run.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm that earns an accounting profit in the short run could earn an economic profit (if the price charged is above the average total cost), break even (if the price charged is equal to the average total cost), or suffer an economic loss (if the price charged is below the average total cost but above the average variable cost). The economic profit or loss depends on the specific market conditions and the firm's cost structure.

A Monopolistically Competitive Firm That Earns an Accounting Profit in the Short