Question

For monopolistically competitive firms is it always likely in the long-run to have zero-economic profit? Monopolistically competitive firms in the long-run

Answer 1

True, a monopolistically competitive firm in the long run will be having a zero economic profit because in the long run the market allows free entry and exit in the market, if there is a profit in the short run, that will attract more and more firms in the long run, that will shift the demand curve of the monopolistically competitive firm to the left and this will continue to the point where the price and the average total cost is zero, that means the firm in the market is not making a profit or a loss.