Karlee's Kreations sells handbags in a purely competitive market. Karlee's is currently breaking even. Based on this information, we can conclude that Karlee's Kreations
A) must be operating in long-run equilibrium.
B) will leave this market in the long run because no economic profits are being earned.
C) will continue operating in this market only if the market price rises.
D) may be operating in either short-run or long-run equilibrium.

Question

Quizplus · Accepted Answer

Karlee's Kreations breaking even means it is covering all its costs, including opportunity costs, which can occur in both short-run and long-run equilibrium in a purely competitive market.

Karlee's Kreations Sells Handbags in a Purely Competitive Market