Economics · Market Structures
Given below are an Assertion (A) and a Reason (R). Assertion (A): Firms operating under monopolistic competition earn only normal profits in the long run. Reason (R): The free entry and exit of firms erodes any short-run supernormal profits. Select the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is false but R is true
- 2A is true but R is false
- 3Both A and R are true but R is not the correct explanation of A
- 4Both A and R are true and R is the correct explanation of A✓
Correct answer
Both A and R are true and R is the correct explanation of A
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