In the long run, when economic profit is zero, firms leave the industry, which will increase the market supply and price until economic profits are positive.

Question

Quizplus · Accepted Answer

In the long run, when economic profit is zero, firms do not leave the industry because they are covering all their costs, including opportunity costs. Zero economic profit is a normal condition in a perfectly competitive market, indicating that resources are optimally allocated.

In the Long Run, When Economic Profit Is Zero, Firms