In Monopolistic Competition, Easy Industry Entry and Exit Drives Long-Run

question 141

True/False

In monopolistic competition, easy industry entry and exit drives long-run profits of firms to zero.

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Definitions:

Normal Good

a good for which demand increases as the income of consumers increases and falls when their income decreases, assuming all other factors are constant.

Income Level

The amount of monetary or material wealth that an individual, family, or group receives, usually quantified on an annual basis.

Chocolate-Covered Peanuts

Peanuts that have been coated in a layer of chocolate, serving as a sweet and crunchy snack.

Preference

An individual's choice or inclination towards a specific option among a set of alternatives based on tastes, utility, or desirability.