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In the Long Run, the Economic Profit Earned by a Firm

Question 23

Multiple Choice

In the long run, the economic profit earned by a firm under monopolistic competition:


A) is positive because firms produce with excess capacity.
B) is zero because of price wars among a small number of firms.
C) is zero because of free entry and exit possibilities in the market.
D) is positive because of advertising and product differentiation by the firms.
E) is positive because of collusive behavior between firms.

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