In the long run, the firm in Exhibit 107 can expect
A)to earn an economic profit of $760
B)earn an economic profit of $950
C)earn zero economic profit
D)earn an economic profit of $990
E)suffer a loss of $1,000

Question

In the long run, the firm in Exhibit 10­7 can expect
A)to earn an economic profit of $760 
B)earn an economic profit of $950 
C)earn zero economic profit 
D)earn an economic profit of $990 
E)suffer a loss of $1,000

Quizplus · Accepted Answer

In the long run, firms in a perfectly competitive market are expected to earn zero economic profit as the entry and exit of firms lead to adjustments in prices and profits. Therefore, the firm in Exhibit 10-7 can expect to earn zero economic profit in the long run.

In the Long Run, the Firm in Exhibit 10­7 Can

In the Long Run, the Firm in Exhibit 107 Can