(Answered) 3. How short-run profit or losses induce entry or exit Citrus Scooters is a company that…

➤ Why do entry and exit drive economic profit to zero in the long run for monopolistic competition but not for monopoly?
In monopolistic competition free entry erodes short-run profits because rival firms introduce close substitutes, shifting demand for each firm left until price equals average cost. A monopoly faces barriers to entry, so rivals cannot eliminate profits. The monopolist can sustain positive economic profit since market power and entry barriers persist.