In long run equilibrium:

Question

Quizplus · Accepted Answer

In long run equilibrium, the market is in a state where there is no incentive for firms to enter or leave. This means that the existing firms are earning normal profits and there are no excess profits to be made that would attract new firms, nor are there significant losses that would force existing firms to exit the market. Therefore, choice A is correct. Choices B and D are not correct because in long run equilibrium, while prices and quantities are stable, they are not necessarily predictable for long periods of time and there is no Walrasian auctioneer determining them. Choice C is also not correct because in long run equilibrium, no firms enter or leave the market.

In Long Run Equilibrium