A purely competitive firm
A) must earn a normal profit in the short run.
B) cannot earn economic profit in the long run.
C) may realize either economic profit or losses in the long run.
D) cannot earn economic profit in the short run.

Question

Quizplus · Accepted Answer

In the long run, purely competitive firms cannot earn economic profit due to the entry of new firms, which drives prices down to the level of average total costs, resulting in only normal profits.

A Purely Competitive Firm