A purely competitive firm that is earning positive profits in its short-run equilibrium situation will continue to earn positive profits at the long-run equilibrium.

Question

Quizplus · Accepted Answer

In the long run, new firms will enter the market if existing firms are earning positive profits, increasing supply until prices fall to the point where all firms earn normal profits (zero economic profit).

A Purely Competitive Firm That Is Earning Positive Profits in Its