Suppose that in a perfectly competitive market, firms are making economic profits. In the long run, we can expect to see:

Question

Quizplus · Accepted Answer

In the long run of a perfectly competitive market, firms are free to enter or exit the market. If firms are making economic profits, more firms will enter the market to take advantage of those profits. This will increase supply and drive down the market price, reducing economic profits for all firms in the market. As a result, in the long run of a perfectly competitive market, economic profits tend to become zero. Therefore, the best choice is D.

Suppose That in a Perfectly Competitive Market, Firms Are Making