Asked by Teresa Navarro P on Apr 26, 2024
Verified
If a monopolistically competitive industry is earning short-run profits, new competitors will enter the industry in the long run and compete away those profits.
Short-run Profits
Short-run profits occur when a company's revenue exceeds its operating costs within a particular, relatively brief period.
Long Run
A period in economics where all inputs, including capital and labor, can be adjusted.
- Acquire knowledge on the processes of entering and leaving markets characterized by monopolistic competition and the consequences on financial gains.
Verified Answer
JM
Jairo MariscalMay 01, 2024
Final Answer :
True
Explanation :
In a monopolistically competitive market, short-run profits attract new entrants, increasing competition and driving down prices and profits until only normal profits are earned in the long run.
Learning Objectives
- Acquire knowledge on the processes of entering and leaving markets characterized by monopolistic competition and the consequences on financial gains.
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