Firms in an industry will not earn long-run economic profits if

Name: Firms in an industry will not earn long-run economic profits if
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Question

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In a market where there is free entry and exit of firms, economic profits tend to be zero in the long run because new firms will enter the market if existing firms are earning economic profits, increasing supply and driving down prices and profits until they reach a normal level.

Firms in an Industry Will Not Earn Long-Run Economic Profits