Which of the following is true of a perfectly competitive firm?
A) The firm is a price maker.
B) If the firm wishes to maximize profits it will produce an output level in which marginal revenue exceeds marginal cost.
C) The firm will not earn an economic profit in the long run.
D) The firm's short-run supply curve is its MC curve below its AVC curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and in the long run, they earn zero economic profit due to free entry and exit in the market. This ensures that any potential economic profits are competed away.

Which of the Following Is True of a Perfectly Competitive