In the Long Run, the Economic Profit Earned by a Firm

question 10

Multiple Choice

In the long run, the economic profit earned by a firm under monopolistic competition:

• A) is positive because firms produce with excess capacity.
• B) is zero because of price wars among a small number of firms.
• C) is zero because of free entry and exit possibilities in the market.
• D) is positive because of advertising and product differentiation by the firms.
• E) is positive because of collusive behavior between firms.

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Definitions:

B+ average

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