In a perfectly competitive market, firms:

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In a perfectly competitive market, firms earn only normal profit in the long run. This is because in a perfectly competitive market, there are many small firms producing identical products, and there are no barriers to entry or exit. As a result, in the long run, firms can only earn enough profit to cover their opportunity cost of production, i.e., normal profit. If firms were able to earn economic profit, then new firms would enter the market and drive down prices until economic profit is eliminated. If firms were experiencing losses, then some firms would exit the industry, reducing supply and raising prices until it becomes profitable again.

In a Perfectly Competitive Market, Firms