Monopolistic Competition Practice Test

A monopolistically competitive firm, BeanBuzz Coffee, sells a differentiated product (signature cold brew) and faces downward-sloping demand. In the short run, it produces where $MR=MC$ at $Q=80$ cups per day and charges $P=$$5$$ per cup. At $Q=80$, $ATC=$$4$$ per cup. Based on the monopolistically competitive firm’s situation, what happens to profit in the long run (after enough time for entry or exit)?

A monopolistically competitive firm, PetalPop Florals, sells a differentiated product (custom bouquet subscriptions) and faces downward-sloping demand. In the short run, it produces where $MR=MC$ and earns positive economic profit. Based on the monopolistically competitive firm’s situation, which feature explains why long-run economic profit is zero (after enough time for entry or exit)?