Economic profit in long-run equilibrium in perfect competition will be:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, economic profit in the long-run equilibrium is zero because firms can freely enter and exit the market. This drives the price down to the point where it equals the minimum of the average total cost, meaning firms only cover their opportunity costs. Accounting profit, which does not consider opportunity costs, can still be positive under these conditions. Therefore, economic profit will be less than accounting profit.

Economic Profit in Long-Run Equilibrium in Perfect Competition Will Be