A perfectly competitive firm in long run equilibrium will earn

Question

Quizplus · Accepted Answer

In the long run equilibrium of a perfectly competitive market, firms can enter or exit the market freely. This means that if a firm is earning a positive economic profit, other firms will enter the market and competition will increase, driving down the price and reducing the profit margin of each firm. Conversely, if a firm is earning negative economic profit, some firms will exit the market, reducing competition and increasing the price and profit margin for the remaining firms. In the long run, the market will stabilize at a price where firms earn zero economic profit, also known as the normal rate of return. Therefore, a perfectly competitive firm in long run equilibrium will earn zero economic profit.

A Perfectly Competitive Firm in Long Run Equilibrium Will Earn