46) iTunes is an online digital media store operated by Apple. Songs may be purc

Question

46) iTunes is an online digital media store operated by Apple. Songs may be purchased individually, and each song has a popularity meter that keeps track of how many consumers have downbaded the song. What information does the popularity meter on iTunes give to consumers, and does the meter iself influence how many consumers download so 47) Why does a monopolistic competitive industry experience zero economic profits in the long run? 48) Products can be diferentiated along many dimensions. Explain.

Explanation / Answer

In monopolistic competition no Barriers to entry exist .Hence it it is quite easy for new firms to enter the market in the long run.At this point the firm economic profits are zero and there is no longer an incentive for new firms to enter the market.

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