In the long run, a firm in a perfectly competitive market will

Question

Quizplus · Accepted Answer

In the long run, a firm in a perfectly competitive market will not be able to make an economic profit due to the presence of free entry and exit. If the firm is making an economic profit in the short run, new firms will enter the market, increasing competition and driving down prices until the economic profit is eliminated. However, the firm will continue to produce and earn a normal profit, which is the minimum amount of profit required to keep the owners invested in the business. Therefore, the best choice is B, as the firm will make zero economic profit in the long run but will earn a normal profit.

In the Long Run, a Firm in a Perfectly Competitive