Properties of long-run competitive equilibrium with free entry include:
A) an equilibrium price equal to the minimum MC.
B) firms earning zero profits.
C) active firms producing at their maximum scales of production.
D) All of these are properties of long-run competitive equilibrium.

Question

Quizplus · Accepted Answer

In long-run competitive equilibrium with free entry, firms earn zero economic profits because any economic profit attracts new firms into the industry, increasing supply and driving down prices until profits are eliminated.

Properties of Long-Run Competitive Equilibrium with Free Entry Include