Question

Why do most firms in monopolistic competition typically make zero profit in the long​ run?

A. because the total market is not large enough to accommodate so many firms
B. because the lack of entry barriers would compete away profits
C. because firms do not produce at their minimum efficient scale
D. because firms produce differentiated products

Answer 1

The correct answer is B. because the lack of entry barriers would compete away profits.

Step-by-step explanation:

Monopolistic competition or competition between monopolies is a type of competition in which there is a significant number of producers acting in the market without any dominant control by any of these in particular. This is very frequent within the markets of products that are normally found in supermarkets, where there are products of different brands, but with particular characteristics and within each product group, the characteristics make them different from each other, but similar enough to compete with other producers and each other.