A firm in a perfectly competitive industry would exhibit which characteristic?
I. An ability to produce as much output as the firm desires at the market price
II. No economic profits in the short run but possible economic profits in the long run

Question

Quizplus · Accepted Answer

Firms in perfectly competitive markets can sell as much as they want at the market price due to the price-taking behavior, but they can only earn normal profits in the long run due to free entry and exit in the market.

A Firm in a Perfectly Competitive Industry Would Exhibit Which