When all perfectly competitive firms in a market or all monopolistically competitive firms in a market make zero economic profit,

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In a situation where all firms in a perfectly competitive or monopolistically competitive market are making zero economic profit, it indicates that they are covering all their costs, including opportunity costs, but not making any excess profit. This scenario does not incentivize new firms to enter the market since there is no extra profit to be earned beyond covering costs. Existing firms have no reason to exit as they are covering their costs. This equilibrium discourages both entry and exit.

When All Perfectly Competitive Firms in a Market or All