Which of the following is true concerning purely competitive industries?
A)There will be economic losses in the long run because of cut-throat competition.
B)Economic profits will persist in the long run if consumer demand is strong and stable.
C)In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits.
D)There are economic profits in the long run but not in the short run.

Question

Quizplus · Accepted Answer

In purely competitive industries, firms may experience economic losses or profits in the short run due to fluctuations in market conditions. However, in the long run, the entry and exit of firms ensure that only normal profits (zero economic profits) are earned, as any economic profits would attract new entrants, increasing supply and driving down prices until only normal profits are made.

Which of the Following Is True Concerning Purely Competitive Industries