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JAMB Economics 2009 Question 24

Question 24

Market Structures

In the long run, one of the characteristics of monopolistic competitive firms is that they

  1. A.make abnormal profits
  2. B.suffer losses
  3. C.make normal profits
  4. D.collude with each other
Show the answer and explanation

Answer: C (make normal profits)

Explanation

Free entry lets new firms come in until supernormal profits disappear, leaving only normal profit in the long run.