Which of the following is true about long-run equilibrium in a monopolistically competitive market?
a. Firms earn zero economic profit because price equals long-run average cost, but the equilibrium is not allocatively efficient because price exceeds the marginal cost of the last unit produced.
b. They may earn negative, zero, or positive economic profit because monopolistically competitive firms are price takers.
c. Each firm faces a perfectly elastic demand curve and earns zero economic profit because price equals long-run average cost, and are allocatively efficient because price equals marginal cost for the last unit sold.
d. None of the above are correct.
a
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