The characteristic of ease of entry and exit ensures that perfectly competitive firms will be able to earn positive economic profits over the long run.

Question

Quizplus · Accepted Answer

The characteristic of ease of entry and exit in a perfectly competitive market ensures that economic profits will be driven down to zero in the long run, as new firms enter the market to take advantage of the profits being earned by existing firms. Therefore, perfectly competitive firms will not be able to earn positive economic profits in the long run.

The Characteristic of Ease of Entry and Exit Ensures That