× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
a
5
k
5
c
5
B
5
l
5
C
4
s
4
a
4
t
4
i
4
r
4
r
4
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
HKMO HKMO
wrote...
Posts: 15
Rep: 1 0
7 years ago
Why can a firm in monopolistic competition make an economic profit only in the short run?
Read 245 times
1 Reply

Related Topics

Replies
wrote...
#1
Staff Member
2 years ago
In the short run, a monopolistically competitive firm maximizes profit or minimizes losses by producing that quantity that corresponds to when marginal revenue = marginal cost. If average total cost is below the market price, then the firm will earn an economic profit.

When price is equal to average cost, economic profits are zero. Thus, although a monopolistically competitive firm may earn positive economic profits in the short term, the process of new entry will drive down economic profits to zero in the long run.
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1130 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 295
  
 264
  
 335
Your Opinion
Which industry do you think artificial intelligence (AI) will impact the most?
Votes: 352
Previous poll results: How often do you eat-out per week?