The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However, it is possible for a firm to continue to earn economic profits if the firm
A)expands its marketing budget.
B)adopts new technologies that enable it to lower its cost of production.
C)expands its product offerings to appeal to a wider range of consumers.
D)reduces its price to expand its market.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms can continue to earn economic profits in the long-run if they adopt new technologies that enable them to lower their cost of production. This allows the firm to lower prices and increase their market share, while still earning profits. Expanding marketing budgets, expanding product offerings, or reducing prices alone may not be sufficient to sustain economic profits in the long-run.

The Economic Analysis of Monopolistic Competition Shows That Market Forces