If firms in a perfectly competitive industry are making zero economic profit, then

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, if firms are making zero economic profit, it means they are covering all their costs, including opportunity costs. This situation indicates that firms are earning a normal profit, which is the minimum profit necessary for them to stay in the industry. Therefore, there is no incentive for firms to either enter or exit the market, as existing firms are earning just enough to keep them in the market, and there's no extra profit to attract new entrants.

If Firms in a Perfectly Competitive Industry Are Making Zero