The dry cleaning industry is in monopolistic competition. In the short​ run, the​ profit-maximizing price is​ $10 per item and the average total cost is​ $6 per item. In​ long-run equilibrium, the​ profit-maximizing price is​ $8 per item. In​ long-run equilibrium, what is the economic profit of a firm in the dry cleaning​ industry? In​ long-run equilibrium, the dry cleaning firm makes ​$ nothing economic profit.

In long-run equilibrium for a firm in monopolistic competition, economic profit is zero. This situation occurs because of the entry and exit of firms in the industry. When firms are making a profit (like with a price of $10 and a cost of $6), new firms are attracted to the industry until the profit is competed away.

In your example, since the profit-maximizing price in the long run is $8 per item, to determine economic profit, you'd need to know if the average total cost matches this price. If the dry cleaning firm's average total cost is also $8 per item in the long run, it means they are breaking even, and the economic profit is zero, as you have indicated in the last part of your input.

Extra: The concept of economic profit is different from accounting profit. Economic profit takes into account the opportunity costs of all resources, including a normal return on investment, while accounting profit looks at the explicit costs and revenue.

Monopolistic competition is a market structure characterized by many firms selling products that are similar but not identical. These firms have some control over their prices because of product differentiation and hence are price makers, unlike in perfect competition where firms are price takers.

In the short run, firms in monopolistic competition can make a profit or loss. However, in the long run, if firms are making an economic profit, new firms will be attracted to the market due to low barriers to entry. This entry will continue until the profits are eroded away, and the existing firms will only make enough profit to cover their economic costs (including a normal return on investment), resulting in zero economic profit.

Similarly, if firms are incurring losses in the short run, some firms will exit the industry. This will increase the demand for the remaining firms, thus increasing their profits back toward zero as long as their price covers the average total cost.

The zero economic profit condition in the long run does not mean the firm is not making money. It means that the firm's total revenues are enough to cover all its explicit and implicit costs, including opportunity costs. The firm is earning a normal profit, which is the minimum profit necessary to keep it operating in the industry.