In long-run equilibrium, monopolistically competitive firms will show a(n) normal profit.

Here's why:

1. In the short run, monopolistically competitive firms may make above-normal profits. This is because they have some degree of market power that allows them to set their own prices.

2. However, these above-normal profits attract new firms into the market, increasing competition.

3. As new firms enter the market, the demand for the existing firm's product decreases, causing the firm's demand curve to shift to the left.

4. This process continues until firms are no longer making above-normal profits. At this point, no new firms have an incentive to enter the market, and the market is in long-run equilibrium.

5. In long-run equilibrium, monopolistically competitive firms make normal profits. This is because the downward-sloping demand curve is tangent to the average total cost curve, meaning that price equals average total cost.

So, the correct answer is "normal profit".

Question

In long-run equilibrium, monopolistically competitive firms will show a(n) normal profit.

Here's why:

1. In the short run, monopolistically competitive firms may make above-normal profits. This is because they have some degree of market power that allows them to set their own prices.

2. However, these above-normal profits attract new firms into the market, increasing competition.

3. As new firms enter the market, the demand for the existing firm's product decreases, causing the firm's demand curve to shift to the left.

4. This process continues until firms are no longer making above-normal profits. At this point, no new firms have an incentive to enter the market, and the market is in long-run equilibrium.

5. In long-run equilibrium, monopolistically competitive firms make normal profits. This is because the downward-sloping demand curve is tangent to the average total cost curve, meaning that price equals average total cost.

So, the correct answer is "normal profit".

Knowee AI · Accepted Answer

In long-run equilibrium, monopolistically competitive firms will show a(n) normal profit.

Here's why:

1. In the short run, monopolistically competitive firms may make above-normal profits. This is because they have some degree of market power that allows them to set their own prices.

2. However, these above-normal profits attract new firms into the market, increasing competition.

3. As new firms enter the market, the demand for the existing firm's product decreases, causing the firm's demand curve to shift to the left.

4. This process continues until firms are no longer making above-normal profits. At this point, no new firms have an incentive to enter the market, and the market is in long-run equilibrium.

5. In long-run equilibrium, monopolistically competitive firms make normal profits. This is because the downward-sloping demand curve is tangent to the average total cost curve, meaning that price equals average total cost.

So, the correct answer is "normal profit".

Multiple Choice QuestionIn long-run equilibrium, monopolistically competitive firms will show a(n) Blank______.Multiple choice question.above-normal profitnormal profitincreasing lossbelow-normal profit

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