Perfectly competitive firms earn zero economic profits in the long run.

Name: Perfectly competitive firms earn zero economic profits in the long run.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

In perfect competition, firms earn only normal profits in the long run which means just covering their cost of production. Economic profits are zero because there are no barriers to entry and any profitable opportunity will attract new firms until the profits are competed away.

Perfectly Competitive Firms Earn Zero Economic Profits in the Long