Q348
In long-run, all firms in monopolistic competition
A.
Earn supernormal profits
B.
Earn normal profits
AnswerC.
Incur losses
D.
May earn normal profit, super normal profit or incur losses
Answer: Option B
Solution
Answer: Option B
Solution:
In long-run, all firms in monopolistic competition earn normal profits. In the long‐run, the competition brought about by the entry of new firms will cause each firm in a monopolistically competitive market to earn normal profits, just like a perfectly competitive firm.