If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms, they will be unable to earn higher-than-normal profits in the long run.
A monopolistic competition is an industry that is a market where there ae many competing supplier of differentiated goods. Goods sold in a monopolistic competition are substitutes for one another. The barriers of entry into the industry is low. An example of monopolistic competition are restaurants.
A perfect competition is an industry where there are numerous buyers and sellers of identical goods and services. The market share of sellers is so low that the sellers are not able to influence the price at which the goods are sold in the market. Firms that operate in a perfectly completive industry earn zero economic profit due to no barriers to the entry and exit of firms into the industry.
Here are the options:
A. they will be unable to earn higher-than-normal profits in the short run. O B. they will wish to cooperate to make decisions about what price to charge.
OC. they will wish to cooperate to make decisions about what quantity to produce.
O D. they will be unable to earn higher-than-normal profits in the long run.
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