Asked by Daniel Amoako on Jun 10, 2024
Verified
In monopolistic competition, short-run positive economic profits of firms in the market will cause the market demand to expand.
Economic Profits
The excess of total revenues over total costs, including both explicit and implicit costs.
Market Demand
The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.
- Analyze the impact of industry entry and exit on the long-run economic profitability in monopolistically competitive markets.
Verified Answer
TD
Tùng D??ngJun 16, 2024
Final Answer :
False
Explanation :
In monopolistic competition, short-run positive economic profits attract new firms to the market, increasing competition and reducing the profits of existing firms, rather than expanding market demand.
Learning Objectives
- Analyze the impact of industry entry and exit on the long-run economic profitability in monopolistically competitive markets.