The free entry and exit of firms in a monopolistically competitive market guarantees that
A)both economic profits and economic losses can persist in the long run.
B)both economic profits and economic losses disappear in the long run.
C)economic profits, but not economic losses, can persist in the long run.
D)economic losses, but not economic profits, can persist in the long run.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, the free entry and exit of firms ensure that any economic profits or losses are eliminated in the long run, leading to firms earning zero economic profit.

The Free Entry and Exit of Firms in a Monopolistically