The typical firm in a monopolistically competitive industry: experiences short-r

Question

The typical firm in a monopolistically competitive industry: experiences short-run losses that usually turn into profits in the long run. Oearns a normal profit (zero economic profit) in the long run because there are no barriers to prevent the entry of new firms with similar products O produces an output for which there are no close substitutes, which allows the fim to earn an economic profit in both the short run and the long run. can earn economic profit in the long run because barriers to entry exist.

Explanation / Answer

Answer
Option second
the monopolistic competitive firm produces at ATC =P in the long run because there is free entry and exit if the firm is making losses in short run then in long run some of the firms leave market which shifts individual firms demand curve to right and vice versa.

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