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Saifali Nakarani
on Oct 26, 2024

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Suppose the dry-cleaning market is monopolistically competitive and economically profitable this year.In the long run,the demand for any one firm's dry-cleaning services will _____ as more firms enter the industry,causing economic profits to _____.

A) decrease;become economic losses
B) decrease;fall to zero
C) not change;fall
D) increase;increase

Dry-Cleaning Market

The sector of the economy that provides services of cleaning clothes and textiles using a chemical solvent rather than water.

Monopolistically Competitive

Describes a market structure in which many firms sell products that are similar but not identical, allowing for some degree of market power.

Economic Profits

A rephrased definition: The surplus achieved by a firm after accounting for both the operating expenses and the opportunity costs of all resources employed.

  • Explain how the entry and exit of firms affect the market structure and individual firms' economic profits in monopolistic competition.
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Triten SmithOct 31, 2024
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