Which of the following occurs in long-run, perfectly competitive equilibrium?

Question

Quizplus · Accepted Answer

In long-run, perfectly competitive equilibrium, all firms earn zero economic profits. This is because new firms will enter the market due to supernormal profits, increasing market supply and lowering prices until profits are reduced to zero. Conversely, if firms are making losses, some firms will exit the market, reducing market supply and raising prices until profits are zero. Therefore, in the long run, perfectly competitive markets are characterized by the absence of economic profits.

Which of the Following Occurs in Long-Run, Perfectly Competitive Equilibrium