In long run equilibrium, monopolistically competitive firms experience ______ economic profits.
can not be determined
Monopolistically competitive firms can earn positive economic profits only in the short-run. If the firms are earning positive economic profits in the short-run, more firms enter the industry in the long-run. This, in turn, reduces the demand for all the firms as there is an increase in the number of close substitutes in the market.
The demand for all the firms decreases up to the point at which the demand curve is a tangent to the long-run average total cost curve of the firms and the economic profits are eliminated.
Ans: B. zero
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