In the long run in monopolistic competition:

Question

Quizplus · Accepted Answer

In the long run, economic profits in monopolistic competition are driven to zero due to the existence of low barriers to entry which incentivizes new firms to enter the market until profits are eroded. Thus, choice A) is the best choice. Choices B) and C) are more characteristic of perfect competition, while choice D) is unlikely since firms in monopolistic competition can differentiate their products, which allows them to maintain a certain level of market power.

In the Long Run in Monopolistic Competition