Monopolistic competitive firms will earn economic profits in the long run becaus

Question

Monopolistic competitive firms will earn economic profits in the long run because of their ability to control the price of the product. Monopolistic competitive firms that earn economic profits in the short run commonly will find their profits competed away in the long run. Monopolistic competitive firms will earn zero economic profits in both the short and the long run. Monopolistic competitive firms must earn economic profits in the long run, or they wil shut down. Monopolistic competitive firms must earn economic profits in the short run, or they will shut down. Save Question 57 (2 points) "In equilibrium, a monopolistic competitor will produce an output level that is less than the level that would minimize its average total costs." This is a statement of the law of diminishing returns. law of second best. law of variable proportions. excess capacity theorem. Activity Details P En Now 24 2017 11.45 PM

Explanation / Answer

57. Excess capacity theorem

Monopolistic firm can produce more output but to maximize profit, it does not produce to its maximum capacity.

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