« previous next »

Author Question: Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit ... (Read 56 times)

panfilo

  • Hero Member
  • *****
  • Posts: 572
on: Jun 29, 2018
Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit in the long run?
 
  What will be an ideal response?

Question 2

The famous saying, There is no such thing as a free lunch means
 
  A) we do not live in a free country.
  B) the value of our dollar keeps declining.
  C) people face tradeoffs.
  D) people do not care about others enough.


Chou

  • Sr. Member
  • ****
  • Posts: 335
Reply #1 on: Jun 29, 2018
Answer to Question 1

Entry into monopolistically competitive markets is easy because there are no barriers to entry. So when firms in monopolistic competition have an economic profit, other firms are attracted to enter the industry, thereby decreasing profits for everyone. Entry continues as long as there is an economic profit so, in the long run when all entry is completed, the firms earn zero economic profit.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

Did you know?

GI conditions that will keep you out of the U.S. armed services include ulcers, varices, fistulas, esophagitis, gastritis, congenital abnormalities, inflammatory bowel disease, enteritis, colitis, proctitis, duodenal diverticula, malabsorption syndromes, hepatitis, cirrhosis, cysts, abscesses, pancreatitis, polyps, certain hemorrhoids, splenomegaly, hernias, recent abdominal surgery, GI bypass or stomach stapling, and artificial GI openings.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

economic question economic question
economic question economic question
economic question economic question
economic question economic question
economic question economic question
economic question economic question
Video: Interview with an Anorexic Woman (Part 1 of 2)

For a complete list of videos, visit our video library