Although Firms Earn Zero Profits in the Long Run, Why

question 37

Multiple Choice

Although firms earn zero profits in the long run, why is the outcome from monopolistic competition considered to be inefficient?

• A) Price exceeds marginal cost.
• B) Quantity is lower than the perfectly competitive outcome.
• C) Goods are not identical.
• D) A and B are correct.
• E) B and C are correct.

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