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Figure: Monopolistic Competition V
-(Figure: Monopolistic Competition V) In the figure Monopolistic Competition V, in the long run firms will:
A) enter this market until all firms earn zero economic profit.
B) exit this market until all remaining firms earn zero profit.
C) enter this market, leading to excess profit for all the firms.
D) exit this market, leading to excess profit for all the remaining firms.

Question

Use the following to answer questions:
Figure: Monopolistic Competition V 
-(Figure: Monopolistic Competition V) In the figure Monopolistic Competition V, in the long run firms will:
A) enter this market until all firms earn zero economic profit. 
B) exit this market until all remaining firms earn zero profit. 
C) enter this market, leading to excess profit for all the firms. 
D) exit this market, leading to excess profit for all the remaining firms.

Quizplus · Accepted Answer

In the long run, firms in a monopolistic competition will enter the market if there are profits, driving profits to zero due to increased competition.

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