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 ensure that firms can enter or leave the market, leading to zero economic profits in the long run. Monopoly, however, typically has barriers to entry, preventing free entry and exit.

In Which of the Following Market Structures Does Free Entry