Ans: typical firm makes zero economic profit.
Explanation:
In a monopolistically competitive market, if existing firms are earning positive economic profit, new firms will enter into the industry until all the firms earn zero economic profit. On the other hand, if existing firms are making loss, some existing firms will exit the market until all the firms earn zero economic profit.
Thus, option (A) is correct answer.
Suppose firms in a monopolistically competitive market are earning economic profits. Entry will occur until the OA....
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