If a Monopolistically Competitive Firm Engages in a Successful Advertising

question 64

Multiple Choice

If a monopolistically competitive firm engages in a successful advertising campaign resulting in above positive economic profits then in the long run that firm will

• A)continue to earn positive economic profits because successful advertising is one of the barriers to entry
• B)earn zero economic profits because the government will begin to regulate the industry
• C)earn negative economic profits because it won't be able to advertise indefinitely
• D)earn zero economic profits because other firms will also begin to advertise
• E)continue to earn positive economic profits because most monopolistically competitive firms can earn economic profits in the long run