Question

In long run equilibrium, monopolistically competitive firms experience ______ economic profits. A positive B zero C...

In long run equilibrium, monopolistically competitive firms experience ______ economic profits.

A

positive

B

zero

C

negative

D

can not be determined

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The force that leads to zero economic profits for monopolistically competitive firms in the long run...
The force that leads to zero economic profits for monopolistically competitive firms in the long run is A.  excess capacity. B.  price wars among firms. C.  entry by new firms. D.  excessive advertising.
In the long run, monopolistically competitive firms tend to have: high economic profits. substantial economic losses....
In the long run, monopolistically competitive firms tend to have: high economic profits. substantial economic losses. zero economic profits. negative economic profits.
In the long run equilibrium, the economic profits earned by a monopolistically competitive firm will be...
In the long run equilibrium, the economic profits earned by a monopolistically competitive firm will be zero. true or false.
Which firms typically have zero economic profits in the long run? options: A) monopolist, perfectly competitive...
Which firms typically have zero economic profits in the long run? options: A) monopolist, perfectly competitive B) perfectly competitive, monopolistically competitive C) oligopolist, monopolistically competitive D) perfectly competitive, oligopolist
For monopolistically competitive firms is it always likely in the long-run to have zero-economic profit? Monopolistically...
For monopolistically competitive firms is it always likely in the long-run to have zero-economic profit? Monopolistically competitive firms in the long-run
If all firms in a perfectly competitive industry earn zero economic profits, in the long run,...
If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the: Select one: a. industry supply curve will shift to the right. b. number of firms in the industry will decrease. c. number of firms in the industry will increase. d. industry supply curve will not shift.
In monopolistically competitive industries, economic profits are competed away in the long run; hence, there is...
In monopolistically competitive industries, economic profits are competed away in the long run; hence, there is no valid reason to criticize the performance and efficiency of such industries. In monopolistically competitive industries economic profits might be increased, but there will be productive inefficiency. economic profits might be diminished and there will be productive inefficiency. economic profits might be increased and there will be productive efficiency. economic profits might be diminished, but there will be productive efficiency. b. “In the long...
Which of the following type of businesses earn zero profits in the long-run market equilibrium? Oligopolists...
Which of the following type of businesses earn zero profits in the long-run market equilibrium? Oligopolists and monopolistically competitive firms. Perfectly competitive firms and monopolists. Perfectly competitive firms and monopolistically competitive firms. Monopolists and oligopolists
In the long run, monopolistically competitive firms _______. 1) produce output at a minimum marginal cost....
In the long run, monopolistically competitive firms _______. 1) produce output at a minimum marginal cost. 2) face perfectly elastic demand curves. 3) earn both positive accounting amd economic profits. 4) earn zero economic profit but positive accounting profit. 5) merge and form a few dominant firms to maximize profit.
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?...
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?                         a) since firms allowed to enter and exit the market, firms earning negative profits will leave the market,                         while new firms enter the market to take up the positive profits                         b) since firms all produce the same good, they must have the same cost so they all earn zero profits                         c) firms cannot raise price so it is not possible...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT