Firms can earn economic profits even in the long run if
A)they charge the highest price possible
B)there is a cost-reducing technological change
C)there are significant barriers to entry
D)marginal revenue equals marginal cost
E)price is less than average variable cost at all rates of output

Question

Quizplus · Accepted Answer

Significant barriers to entry can prevent new firms from entering the market and competing away profits, allowing existing firms to earn economic profits even in the long run. The other options are not necessarily sufficient to ensure long-run economic profits.

Firms Can Earn Economic Profits Even in the Long Run