A monopolistically competitive firm in short-run equilibrium:

A) will make negative profit (lose money) .
B) will make zero profit (break-even) .
C) will make positive profit.
D) Any of the above are possible.

Short-run Equilibrium

A state in a market where supply equals demand within a short-term period, leading to a stable price level temporarily.

Monopolistically Competitive

In a monopolistically competitive market, firms sell products that are not perfect substitutes for each other, leading to some degree of market power but with free entry and exit in the long run.

Positive Profit

A financial gain that occurs when the revenues from business activities exceed the expenses, costs, and taxes needed to sustain the operation.