In the long run, a representative firm in a monopolistically competitive industry will end up
A) having an elasticity of demand that will be less than it was in the short run.
B) having a larger number of competitors than it will in the short run.
C) producing a level of output at which marginal cost and price are equal.
D) earning a normal profit, but not an economic profit.

Question

Quizplus · Accepted Answer

In the long run, firms in a monopolistically competitive market earn zero economic profit due to the entry of new firms, which drives down prices and profits to a normal level.

In the Long Run, a Representative Firm in a Monopolistically