In the long run,firms in a perfectly competitive market will:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will exit the market if they are unable to cover their average total costs with the market price. Therefore, option A is valid. If the market price is higher than their lowest average total cost, then they will earn positive profits, which will attract other firms to enter the market, as mentioned in option B. Firms earning zero economic profits will not be able to attract other firms, as there is no incentive for them to enter the market. Therefore, option C is also correct. As all the options are valid, the correct answer is D.

In the Long Run,firms in a Perfectly Competitive Market Will