Question

Only one of the following statements is false at the long-run equilibrium for a firm in a monopolistically competitive industry. Which one is false?

a) Price equals Average Total Cost, like a competitive firm
b) Price exceeds marginal cost, like a monopolist
c) Firms make zero economic profit, like a competitive firm
d) Firms produce at the bottom of the ATC curve, like a competitive firm

Answer 1

The false statement at the long-run equilibrium for a firm in a monopolistically competitive industry is that firms make zero economic profit, like a competitive firm.

Step-by-step explanation:

The statement that is false at the long-run equilibrium for a firm in a monopolistically competitive industry is option c) Firms make zero economic profit, like a competitive firm. In a monopolistically competitive market, firms can earn positive economic profits in the short term but in the long run, new competitors will enter the market and drive down economic profits to zero.