In long-run equilibrium, the typical perfectly competitive firm will:

Question

Quizplus · Accepted Answer

In the long run, firms in a perfectly competitive market will earn zero economic profit. This is because if firms are making economic profit, new firms will enter the market, which will increase supply and decrease the price until economic profit is reduced to zero. Likewise, if firms are making losses, some firms will exit the market, which will decrease supply and increase the price until firms are earning zero economic profit. Therefore, the typical perfectly competitive firm will earn zero economic profit in the long run.

In Long-Run Equilibrium, the Typical Perfectly Competitive Firm Will