In monopolistic competition

Question

Quizplus · Accepted Answer

In monopolistic competition, firms can earn economic profit in the short run due to product differentiation, but in the long run, new firms will enter the market, increasing competition and reducing demand for existing firms' products. This results in firms' inability to earn economic profit over the long run. Accounting profit may still be earned, but not economic profit. Firms also cannot block entry into the market, as barriers to entry are low.

In Monopolistic Competition