In the long run, both monopolistic competition and competitive markets result in: a) a wide variety of brand-name choices for consumers. b) an inefficient allocation of resources. c) zero economic profit for firms. d) excess capacity. e) insufficient capacity.

Question

Zachary Arellano

Business

15 August, 10:24

In the long run, both monopolistic competition and competitive markets result in: a) a wide variety of brand-name choices for consumers. b) an inefficient allocation of resources. c) zero economic profit for firms. d) excess capacity. e) insufficient capacity.

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Gabriella Ortega · Answer 1

c) zero economic profit for firms.

Explanation:

In both cases, while there is room for economic gain, market structures - perfect competition and monopolistic competition - will attract entrants to compete. In the long run, the market goes into balance when economic profit is zero.

Recalling that the concept of economic profit is different from accounting profit.