If firms in a monopolistic competitive market are earning negative economic profits, it is likely that: a) firms will enter the market. b) firms will exit the market. c) the firms in the market will shut down immediately. d) the firms in the market wi

Question:

If firms in a monopolistic competitive market are earning negative economic profits, it is likely that:

a) firms will enter the market.

b) firms will exit the market.

c) the firms in the market will shut down immediately.

d) the firms in the market will expand to try to capture lower costs per unit.

Monopolistic Competition

Firms in monopolistic competition look to maximize profits both in the short-run and in the long-run. Firms whose economic profit is below zero, face tough choices.

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Monopolistic Competition: Definition, Theory, Characteristics & Examples

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Chapter 3 / Lesson 56

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Learn the monopolistic competition definition with examples. Study monopolistic competition vs. perfect competition and other market types to learn the differences.

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If firms in a monopolistic competitive market are earning negative economic profits, it is likely...

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Monopolistic Competition

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