In a long-run equilibrium in a perfectly competitive market, the average firm earns positive economic profits.

Question

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In a long-run equilibrium in a perfectly competitive market, the average firm earns zero economic profits. This is because in the long run, new firms can enter the market if existing firms earn positive economic profits, thus increasing competition and driving prices down until profits are zero. Conversely, if firms earn negative economic profits, some firms will exit the market and prices will rise until profits are zero.

In a Long-Run Equilibrium in a Perfectly Competitive Market, the Average