« previous next »

Author Question: Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit ... (Read 110 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?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

Did you know?

About 3.2 billion people, nearly half the world population, are at risk for malaria. In 2015, there are about 214 million malaria cases and an estimated 438,000 malaria deaths.

The different types of competition in nature. The different types of competition in nature.
Economic and Social Development Economic and Social Development
economic economic
economic question economic question
economic question economic question
Locate the following places by reference number on the map:Key Locales of Political, Economic, ... Locate the following places by reference number on the map:Key Locales of Political, Economic, ...
Video: EpiPen Animation (Part 2)

For a complete list of videos, visit our video library