Name: Morad Hijazin
Course Number: ECON 5F70 040,
Semester: Summer 2016
Assignment Name: Unit 4 Application
Application: Explain why monopolistic competitors earn only a normal profit in the long run. Provide an industry example to illustrate your explanation.
As we know in the monopolistic competitors the firms are price makers, we are talking about big businesses that control the whole market, and the barriers to enter their industries are very difficult.
Now the firms in long-run at the monopolistic competitors market behaves the same way also the demand in the long run is very responsive to their price changes, when a firms tries maximizing its profit by producing goods to the point where the marginal revenue equals its marginal costs,
Course Number: ECON 5F70 040,
Semester: Summer 2016
Assignment Name: Unit 4 Application
Application: Explain why monopolistic competitors earn only a normal profit in the long run. Provide an industry example to illustrate your explanation.
As we know in the monopolistic competitors the firms are price makers, we are talking about big businesses that control the whole market, and the barriers to enter their industries are very difficult.
Now the firms in long-run at the monopolistic competitors market behaves the same way also the demand in the long run is very responsive to their price changes, when a firms tries maximizing its profit by producing goods to the point where the marginal revenue equals its marginal costs,