If there is free entry in a market,then in the long-run economic profit will be above average.

Question

Quizplus · Accepted Answer

In a competitive market with free entry, economic profits will attract new firms to enter the market, increasing competition and reducing prices, leading to lower economic profits. In the long run, economic profit in a perfectly competitive market will be equal to zero, as firms will only earn enough to cover their costs and receive a normal rate of return. Therefore, economic profit in the long run will be equal to or below average.

If There Is Free Entry in a Market,then in the Long-Run