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2 Aug 2018
explain detail:
Your textbook states that, in the long run, representative firms in monopolistically competitive markets will just break even --- that is, earn zero economic profits. Yet some firms in highly competitive markets manage to continue to earn economic profits indefinitely. For example, perfumes, cosmetics, and hair care firm LâOreal, in business since 1907, remains highly profitable today, despite competing in fiercely competitive product categories. How has LâOreal managed to stay profitable for so long (clue: they have a research and development staff of over 1000 people).
explain detail:
Your textbook states that, in the long run, representative firms in monopolistically competitive markets will just break even --- that is, earn zero economic profits. Yet some firms in highly competitive markets manage to continue to earn economic profits indefinitely. For example, perfumes, cosmetics, and hair care firm LâOreal, in business since 1907, remains highly profitable today, despite competing in fiercely competitive product categories. How has LâOreal managed to stay profitable for so long (clue: they have a research and development staff of over 1000 people).
Elin HesselLv2
5 Aug 2018