Firms in which of the following industries can make an economic profit in the long run?
A) both monopolistic competition and monopoly
B) perfect competition
C) monopoly
D) monopolistic competition
E) monopolistic competition and perfect competition

Question

Quizplus · Accepted Answer

Only monopolies can make an economic profit in the long run due to their ability to set their own prices without fear of competition. In perfect competition and monopolistic competition, firms may make short-term profits, but in the long run, profits are driven to zero due to the entry of new firms and the ability of consumers to easily switch to substitute products.

Firms in Which of the Following Industries Can Make an Economic