Question

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm Group of answer choices:

a) expands its product offerings to appeal to a wider range of consumers.
b) expands its marketing budget.
c) reduces its price to expand its market
d). adopts new technologies that enable it to lower its cost of production.

Answer 1

In monopolistic competition, a firm can continue earning economic profits by expanding its product offerings, reducing its price, and adopting new technologies.

Step-by-step explanation:

In monopolistic competition, market forces tend to eliminate profits in the long run. However, there are certain strategies that a firm can adopt to continue earning economic profits:

1. Expanding its product offerings: By introducing new products or variations, a firm can appeal to a wider range of consumers and increase its market share.
2. Reducing its price: Lowering the price of a product can help a firm expand its market and attract more customers.
3. Adopting new technologies: Embracing new technologies can help a firm lower its production costs, making it more competitive and enabling it to continue earning profits.

These strategies can help a firm differentiate itself from competitors, attract more customers, and remain profitable in the long run.