question archive When a market is monopolistically competitive, the typical firm in the market is likely to experience a: a
When a market is monopolistically competitive, the typical firm in the market is likely to experience a: a
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When a market is monopolistically competitive, the typical firm in the market is likely to experience a:
a. Positive profit in the short run and in the long run,
b. Positive or negative profit in the short run and a zero profit in the long run,
c. Zero profit in the short run and a positive or negative profit in the long run,
d. Zero profit in the short run and in the long run
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Answer choice: b. Positive or negative profit in the short run and a zero profit in the long run.
Explanation:
In a monopolistically competitive market there are many different options of similar products or services for customers. The barriers to entry are often low meaning that it is relatively easy for a new firm to enter the market. This causes a positive or negative profit in the short run and a zero profit in the long run.
