CFA Practice Question

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CFA Practice Question

When a monopolistically competitive industry is in long-run equilibrium, ______

A. firms earn zero economic profits.
B. price equals minimum average total cost.
C. price equals marginal cost.
Correct Answer: A

Since there are no barriers to entry or exit, firms enter or exit monopolistically competitive markets until zero economic profits exist.

User Contributed Comments 2

User Comment
YOUCANDOIT So in long run, price still = ATC but not necessarily at its minimum?
fanDango Correct
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