In long-run equilibrium, the perfectly competitive firm earns __________ economic profits.

Question

Quizplus · Accepted Answer

In long-run equilibrium, perfectly competitive firms earn zero economic profits because any positive economic profits would attract new firms into the industry, increasing supply and driving down prices and profits until they reach zero. Negative profits would cause firms to exit the industry, decreasing supply and raising prices until profits return to zero.

In Long-Run Equilibrium, the Perfectly Competitive Firm Earns __________ Economic