If a Firm in Monopolistic Competition Is Making an Economic

question 75

Multiple Choice

If a firm in monopolistic competition is making an economic profit,

• A) it is in the long run.
• B) other firms can enter the market.
• C) it can do so because it is "monopolistic" and other firms will have a hard time competing with it.
• D) its average cost must exceed its marginal cost.
• E) The question errs because firms in monopolistic competition cannot make an economic profit.

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Definitions:

Agency Coupled

A legal arrangement where an agent has an irrevocable authority primarily for the agent's benefit, based on an interest in the subject matter of the agency.

Liable

Legally responsible or obligated to provide compensation for harm, loss, or damage caused.

Irrevocable

Unable to be changed, reversed, or recovered; final.

Competing

Engaging in a rivalry or competition with others in an attempt to achieve a specific goal, often referring to businesses vying in the same market or industry.