In the Long Run in a Monopolistic Competitive Industry

question 64

Multiple Choice

In the long run in a monopolistic competitive industry,

• A) economic profits will be positive.
• B) price will be driven to zero.
• C) the firm will not operate where MR = MC.
• D) economic profit will be zero.
• E) price will exceed average cost.

---

Definitions:

Price Inelastic

A situation where the quantity demanded or supplied of a good is not significantly affected by changes in price.

Macadamia Nut

A type of tree nut that is known for its rich, buttery flavor, native to Australia and commercially cultivated in various regions worldwide.

Inelastic Demand

A situation where the quantity demanded of a good or service changes little when its price changes.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, resulting in high cross-elasticity of demand.