In monopolistic competition,nonprice competition
A)allows firms to earn above-normal profit in the long run
B)initially causes a leftward shift in the demand curve for each firm's output
C)causes each firm to move upward along a given average total cost curve
D)might lead to economic profit in the short run
E)causes each firm to move toward the right along the given demand curve for its output

Question

Quizplus · Accepted Answer

Nonprice competition allows firms to differentiate their products and create a unique brand image, leading to a loyal customer base and potentially higher prices. This can result in economic profits in the short run, as long as the firm's costs are lower than their revenue. However, in the long run, new firms may enter the market and copy the successful strategies of existing firms, which would increase competition and potentially reduce economic profits.

In Monopolistic Competition,nonprice Competition