In the Long Run, a Firm in Monopolistic Competition Will

question 56

Multiple Choice

In the long run, a firm in monopolistic competition will

• A) make a negative economic profit, that is, an economic loss.
• B) make zero economic profit, that is, a normal profit.
• C) make a positive economic profit.
• D) None of the above answers is necessarily correct because the amount of the profit or loss depends on the slope of the demand curve.

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Definitions:

Uniqueness

Refers to the quality of being the only one of its kind; distinctiveness.

Consumer's Budget

is the total amount of income available to an individual or household to spend on goods and services or to save, after taxes.

Elastic Demand

A situation where the quantity demanded of a product changes significantly in response to changes in the product's price.

Inelastic Demand

Refers to a situation where the quantity demanded of a good or service does not significantly change when its price changes.