Final answer:
Firms in monopolistically competitive markets generally cannot sustain long-term profits due to the entry of new firms in response to economic profits; monopolies, however, can possibly earn long-run profits because of substantial barriers to entry which prevent competition. Option B is correct.
Step-by-step explanation:
The statement that firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry is false. Monopolistically competitive firms can earn economic profits or suffer losses in the short run.
However, in the long run, if they are earning economic profits, other firms will be attracted by these profits and enter the market, leading to a decrease in the individual firm's profits until they reach a normal level. If they are suffering economic losses, firms will exit the market, which will reduce the losses of the remaining firms until they reach a normal profit level.
In contrast, a monopoly may indeed earn long-term economic profits due to significant barriers to entry that prevent competition. These barriers may include legal restrictions, control of a key resource, high costs of entry, economies of scale, or technological superiority. In these cases, a monopoly can sustain high profits in the long run due to the lack of competition.