Why do monopolistic competition and perfect competition yield similar long-run results?

Show Answers

The market generates the most efficient quantity of goods eventuallyBusinesses earn only normal profits in the long termCompanies fully exploit all available economies of scaleFirms operate at the lowest possible average cost

Explanation

In both monopolistic competition and perfect competition, firms tend to earn just normal profits in the long run because any economic profits attract new entrants, driving profits down to zero.