In perfect competition,as the long run approaches,economic profit will cause

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are earning only normal profits in the long run. If economic profits (profits above the normal level) exist, it will attract new firms to enter the market. This will increase the supply of goods, shifting the market supply curve to the right until economic profit is zero, and firms are earning only normal profits. Therefore, the correct option is A.

In Perfect Competition,as the Long Run Approaches,economic Profit Will Cause