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Figure: The Market for Gas Stations
-(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.This market is characterized by many firms,differentiated products,easy entry,and easy exit.In long-run equilibrium,the economic profit earned by the typical gas station will be:
A)equal to the level shown in the figure.
B)negative.
C)zero.
D)Not enough information is given to answer the question.

Question

Use the following to answer question:
Figure: The Market for Gas Stations 
-(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.This market is characterized by many firms,differentiated products,easy entry,and easy exit.In long-run equilibrium,the economic profit earned by the typical gas station will be:
A)equal to the level shown in the figure. 
B)negative. 
C)zero. 
D)Not enough information is given to answer the question.

Quizplus · Accepted Answer

In a market with easy entry and exit, firms will continue to enter until economic profits are driven down to zero. Therefore, in long-run equilibrium, the economic profit earned by the typical gas station will be zero.

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