In which of the following market structures does free entry and exit play an important role in the long-run equilibrium outcome? (i)
Perfect competition
(ii)
Monopolistic competition
(iii)
Monopoly
A)(i) only
B)(i) and (ii) only
C)(ii) and (iii) only
D)(i), (ii), and (iii)

Question

Quizplus · Accepted Answer

In both perfect competition and monopolistic competition, free entry and exit of firms ensure that in the long run, firms earn zero economic profit. In a monopoly, barriers to entry prevent free entry and exit.

In Which of the Following Market Structures Does Free Entry