In the long run, each firm in a perfectly competitive market earns zero economic profit.

Question

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In the long run, firms in a perfectly competitive market will adjust their production and price levels until they earn only normal profits, which is just enough to cover their opportunity cost of capital and other resources. This means that their economic profits will be zero. However, they may still earn accounting profits if they generate more revenue than their explicit costs.

In the Long Run, Each Firm in a Perfectly Competitive