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If the Typical Firm in a Perfectly Competitive Market Is

Question 250

Multiple Choice

If the typical firm in a perfectly competitive market is currently earning a 5% economic profit,what will happen in this market in the long run?


A) new firms will enter until the economic profits have disappeared.
B) firms will exit until the economic profit reaches 10%.
C) firms will neither enter nor exit,since 5% economic profit is enough to maintain the existing number of firms in the market.
D) It depends on the rate of normal profit in this market.

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