Why Can't an Economist Say for Certain That a Monopolistic

question 126

Multiple Choice

Why can't an economist say for certain that a monopolistic competitive firm will always earn zero economic profits in the long run?

• A)Barriers to entry are significant in monopolistic competition.
• B)The very large number of buyers indicates that there will always be demand for the firm's product.
• C)The firms in the industry do not produce identical products.
• D)The firms practice price competition, so at least some firms will always be charging a lower price than other firms and will sell more as a result.
• E)The firms face a horizontal demand curve.

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