Answered: Question 1 -Explain why firms…

Question 1 -Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.3P

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Question 1

-Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run.

- Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition?

Definition Definition Form of market structure in which there are a large number of sellers of a particular product, with each seller selling somewhat differentiated but close substitutes to the product sold by other sellers. Features of monopolistic competition include: Large number of buyers and sellers Differentiated products Free entry and exit of the firms in the market

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