Which of the following is true for both perfect competition and monopoly?
A)Firms produce a differentiated product.
B)Firms cannot earn economic profit in the long run.
C)Individual firms have no ability to control the price of their output and must accept the market price.
D)Firms go out of business in the long run if total revenue cannot cover total cost.
E)Firms usually earn economic profit in the long run.

Question

Quizplus · Accepted Answer

In both perfect competition and monopoly, firms will exit the market in the long run if they cannot cover their total costs with total revenue. This is a fundamental economic principle that applies across different market structures.

Which of the Following Is True for Both Perfect Competition