Economic profit in long-run equilibrium in perfect competition is zero.

Question

Quizplus · Accepted Answer

In perfect competition, there are no barriers to entry or exit, and firms can freely enter or exit the market. This means that in the long run, any profits earned by firms will attract new firms to enter the market, driving down prices and reducing profits until they reach zero. Therefore, in the long-run equilibrium of perfect competition, economic profit is zero.

Economic Profit in Long-Run Equilibrium in Perfect Competition Is Zero