exit up to the point where there are no more losses in this market, for example when the demand curve

touches the average cost curve, as in point Z.

Monopolistic competitors can make an economic profit or loss in the short run, but in the long run, entry and

exit will drive these firms toward a zero economic profit outcome. However, the zero economic profit outcome

in monopolistic competition looks different from the zero economic profit outcome in perfect competition in

several ways relating both to efficiency and to variety in the market.

Monopolistic Competition and Efficiency

The long-term result of entry and exit in a perfectly competitive market is that all firms end up selling at the

price level determined by the lowest point on the average cost curve. This outcome is why perfect competition

displays productive efficiency: goods are produced at the lowest possible average cost. However, in
{"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "moddate": "2022-12-07T14:23:05-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "batch_upload": true, "file_size_mb": 26.99, "upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "file_name": "Microeconomics3e.pdf"}