In a perfectly competitive market,firms will earn zero economic profits in the long run.

Question

Quizplus · Accepted Answer

In the long run, new firms can enter the market and compete for customers, driving prices down and reducing profits for existing firms. Similarly, existing firms can exit the market if they are earning negative economic profits. This process of entry and exit continues until firms are earning only normal profits (zero economic profits).

In a Perfectly Competitive Market,firms Will Earn Zero Economic Profits