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Exhibit: Perfectly Competitive Firm

-(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's economic profit per period in the long run will be:

Question

Use the following to answer question(s): 
Exhibit: Perfectly Competitive Firm
 
-(Exhibit: Perfectly Competitive Firm) The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's economic profit per period in the long run will be:

Quizplus · Accepted Answer

In the long run, firms in a perfectly competitive market will enter or exit until economic profit is zero. In this case, the firm is earning $300 in profit, but this will incentivize new firms to enter the market, increasing supply and reducing the market price. As the market price decreases, the firm's profit will decrease and eventually reach zero in the long run. Therefore, the correct answer is A) zero.

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