The market for electrician services is initially in long-run equilibrium, but then there is a decrease in the market demand for electrician services. One expects that in the long run, the economic profits of typical firms will be:
A)typical of those earned by monopoly firms.
B)negative.
C)zero.
D)positive but less than the level typically earned by monopoly firms.

Question

Quizplus · Accepted Answer

In the long run, the decrease in market demand for electrician services will cause a decrease in the equilibrium price of the services. As a result, firms will experience a decrease in economic profits. In the long run, typical firms will adjust their production levels until they are earning zero economic profits, which is known as the long-run equilibrium. Therefore, the best answer is C.

The Market for Electrician Services Is Initially in Long-Run Equilibrium