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

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will only be able to earn profits in the short run, as in the long run, new firms will enter, increasing supply and driving down prices. If a firm is unable to cover its total costs, it will exit the market in the long run, resulting in lower supply and higher prices. Thus, firms will exit if the price is lower than their lowest average total cost.

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