Which of the following statements about a perfectly competitive industry in long-run equilibrium is true?

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers and there are no barriers to entry or exit. In the long run, firms are able to enter or exit the market to the point where economic profits are zero. This means that each firm is producing at the minimum point on its LRAC curve, where the average total cost is at its minimum and the firm is producing at the most efficient scale. Therefore, option E is the correct answer. Options A to D are incorrect because they are inconsistent with the assumptions of a perfectly competitive market.

Which of the Following Statements About a Perfectly Competitive Industry