Based on the graph above, what is the profit this monopolistic competitive firm earns in the long run?
Answer
$0
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A monopolistic competitive firm earns zero economic profit in the
long run as the market has free entry and exit for the firms in the
market.
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The given firm produces at MR=MC where Q=120 units and from the
demand curve the P=14 and ATC=14 from ATC curve
Economic profit =(P-ATC)*Q
=(14-14)*120=0
the economic profit is zero.
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