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Perfectly Competitive Firms ____ Earn Zero Economic Profit in Long-Run

Question 170

Multiple Choice

Perfectly competitive firms ____ earn zero economic profit in long-run equilibrium because ____.


A) always; firms in perfectly competitive industries always maximize output and so flood the market until the equilibrium price of output is driven to zero
B) sometimes; the demand curve for an individual perfectly competitive firm may or may not cross the company's long-run average total cost curve at its lowest point
C) always; firms enter whenever their economic profit is positive and exit whenever it's negative, so in long-run equilibrium economic profit must always be zero
D) never; no firm would be willing to produce if it received zero economic profit

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