Because economic profits are eliminated in the long run in monopolistic competition,to earn an economic profit firms continuously
A)shut down.
B)exit the industry.
C)innovate and develop new products.
D)declare bankruptcy.
E)decrease their costs by decreasing their selling costs.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms can earn only normal profits in the long run due to the presence of easy entry and exit barriers. If firms want to earn an economic profit in the long run, they need to differentiate their products and continuously innovate to develop new products. By doing so, they can increase their demand and create a brand identity, allowing them to charge higher prices and earn above-normal profits. Therefore, option C, innovate and develop new products, is the best choice.

Because Economic Profits Are Eliminated in the Long Run in Monopolistic