In long-run monopolistically competitive equilibrium, there can be

A) economic profits, but not losses.
B) economic profits or losses.
C) no economic profits, but losses.
D) neither economic profits nor losses.

In the long-run equilibrium of monopolistic competition, firms earn zero economic profit due to the entry and exit of firms in the market. This is because if firms were earning economic profits, new firms would enter the market, increasing competition and driving down profits. Conversely, if firms were incurring losses, some would exit the market, reducing competition and alleviating the losses for the remaining firms. Eventually, firms earn just enough to cover their costs, including a normal return on investment, but do not earn economic profits or incur losses.