What is monopolistic competition? Explain and illustrate with the- help of a diagram how in the long run a firm under monopolistic competition makes only normal profits.
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In monopolistic competition there are no barriers to entry. Therefore in long run, the market will be competitive, with firms making normal profit. In Monopolistic competition, firms do produce differentiated products, therefore, they are not price takers (perfectly elastic demand). They have inelastic demand.
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it is a modern plastic competition by firm under mixed Malli normal profits
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