Can positive economic profits persist under monopolistic competition in the long run. Why?
No, because economic profits will entice new firms to enter the market. When more firms enter the market, each firm's demand curve will shift downward. The demand curve?and hence also the MR curve?will be pushed down so far by the entry of new rivals that when the firm equates MC and MR in an attempt to maximize profits, it simultaneously equates price (P) and average cost (AC) so that economic profits are zero.
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An increase in a consumer's income creates a
A) rightward parallel shift of the budget line. B) leftward parallel shift of the budget line. C) rightward rotation of the budget line, so that the budget line becomes steeper. D) leftward rotation of the budget line, so that the budget line becomes steeper.
If you deposit $10,000 in a savings account at an annual interest rate of 6%, how much will you have in the account at the end of three years?
A) $8,396 B) $11,800 C) $11,910 D) $10,600