Question:
A monopolistically competitive firm may earn abnormally high profits in the
A. Long run, but after entry occurs the short-term perceived demand curve shifts to the right.
B. Short run, but after entry occur, the long-term perceived demand curve shifts to the right.
C. Short term, but the process of entry will drive those profits to zero in the long run.
D. Long term, but the process of entry will drive those profits to zero in the short run.
Answer: C. Short term, but the process of entry will drive those profits to zero in the long run.