When a market has free entry and exit, in the long run, sellers:
A)tend to leave the market.
B)suffer economic losses.
C)have positive profits.
D)have zero economic profits.

Question

Quizplus · Accepted Answer

In the long run, free entry and exit allow new firms to enter the market, which increases competition and drives down prices. As prices decrease, sellers' economic profits decrease until they eventually reach zero. Therefore, in the long run, sellers have zero economic profits.

When a Market Has Free Entry and Exit, in the Long