Why Don't Some Firms in Monopolistic Competition Earn Losses in the Long

question 65

Multiple Choice

Why don't some firms in monopolistic competition earn losses in the long run?

• A) The firms have enough monopoly power to ensure they always earn profits.
• B) Free entry allows enough firms to remain in the market and maintain the critical mass of firms required to attract customers.
• C) Free exit implies that any unprofitable firms leave the market in the long run.
• D) In the long run, firms will build enough brand loyalty among customers to ensure a profitable level of sales.

---

Definitions:

Sleep Patterns

The cyclical rhythms of sleep and waking, typically following a daily schedule and influenced by factors such as age, lifestyle, and health conditions.

Alert Inactivity

A state of being vigilant and ready to react despite not being actively engaged in tasks.

Quiet Sleep

A stage of sleep characterized by the absence of motor activity and vocalization; it is often considered restorative and peaceful.

Active Sleep

A phase of sleep characterized by rapid eye movements, more brain activity, and dreams, also known as REM (rapid eye movement) sleep.