Monopolistic competition will usually result in normal profits for the firms in an industry in the long run. Describe three factors which might change this result.

Monopolistic competition is a type of market structure characterized by many companies offering similar but not identical products. This leads to each firm having some market power, but they still face competition from other firms. In the long run, firms in a monopolistically competitive industry will usually earn normal profits, which means that their total revenue equals their total costs, including the opportunity cost of the resources used.

One factor that could change the result of earning normal profits in a monopolistically competitive industry is a shift in consumer preferences. If consumers' tastes change, they may start to favor certain products over others, leading to an increase in demand for some firms' products and a decrease in demand for others. This could potentially allow some firms to earn above-normal profits while others may earn below-normal profits or even face losses.

Another factor that could alter the normal profits outcome in a monopolistically competitive industry is technological innovations. If a firm develops a new technology that significantly reduces its production costs or enhances the quality of its products, it may be able to charge a higher price or increase its market share. In this case, the firm could earn above-normal profits, at least until other firms adopt the new technology and the competitive landscape is restored.

The third factor that could change the normal profits outcome in a monopolistically competitive industry is government intervention. Policies such as regulations, taxes, or subsidies can influence the conditions in an industry, potentially giving some firms a competitive advantage. For example, if the government provides subsidies to certain firms, they may be able to lower their prices, increase their market share, and thereby earn above-normal profits. On the other hand, regressive taxes or strict regulations may suppress some firms' performance, leading to below-normal profits or losses. In conclusion, while monopolistic competition typically results in normal profits for firms in an industry in the long run, factors like changes in consumer preferences, technological innovations, and government intervention could alter this outcome.