Which of the following is true of perfect competition in the long run?

Question

Quizplus · Accepted Answer

In perfect competition in the long run, firms earn zero economic profit because there is free entry and exit of firms. As new firms enter the market attracted by positive economic profit, the supply of goods increases and prices start to fall. This makes it difficult for existing firms to make a profit and some may exit the market. Eventually, the market reaches equilibrium where the price is equal to the minimum average total cost (ATC) of producing the goods, resulting in zero economic profit for all firms.

Which of the Following Is True of Perfect Competition in the Long