Pure competition over the long run is considered the ideal situation for the consumer because over the long run, purely competitive sellers:
A) earn no economic profit.
B) charge the lowest possible price.
C) produce their output at the lowest possible cost.
D) all of the above.

Question

Quizplus · Accepted Answer

In a purely competitive market, over the long run, sellers earn no economic profit due to the entry of new firms when there are profits, leading to price adjustments until only normal profits are made. They charge the lowest possible price because the market determines the price, and any attempt to charge more would result in no sales due to the availability of perfect substitutes. Additionally, to survive in such a competitive environment, firms must operate at the lowest possible cost to maintain profitability, leading to efficient production methods. Therefore, all of the given options contribute to why pure competition is considered ideal for consumers.

Pure Competition Over the Long Run Is Considered the Ideal