Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 11 - Monopolistic Competition and Oligopoly - Quick Quiz for Figure 11.1 - Page 220: 4

Answer

B. Entry is relatively easy; only a normal profit in the long run.

Work Step by Step

Due to lack of barriers to entry, there is free entry and exit in monopolistic market, like a perfect competition. Due to this free entry and exit, in the long run all firms earn normal profits because if they earn positive/negative profits, firms enter/exit the market due to no barriers, which shifts out/in the supply curve and price level adjusts so that each firm break evens.
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