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18 September, 08:15

In the long run, the economic profits for a monopolistically competitive firm will be rev: 05_15_2018 Multiple Choice the same as the profits for a monopolist. the same as the profits for a purely competitive firm. slightly less than the profits of a monopolist. slightly more than the profits of a purely competitive firm.

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  1. 18 September, 11:55
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    The correct answer is same as the profits of a purely competitive firm.

    Explanation:

    A monopolistic market is characterized by a large number of sellers producing differentiated products which are close substitutes. This market has a relatively easier entry as compared to a monopoly market.

    In the long-run when a monopolistic firm will be earning a positive profit. It will attract other firms to join the market. As new firms enter the market, the market supply will increase. A rightward shift in the market supply curve will cause the price level to decline. This will continue till all the profits decline to zero.

    So, similar to a purely competitive firm, a monopolistic firm also earn zero economic profit in the long run.
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