March 28, 2017

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32. Firm X is a typical firm in a market characterized by the model of monopolistic competition. Suppose that the market is initially in long-run equilibrium, and then there is an increase in demand for services. We can assume that in the long run, the economic profits of typical firms in the industry will be:
A) typical of those earned by monopoly firms.
B) positive but less than the level typically earned by monopoly firms.
C) zero.
D) negative.

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