Which of the following is true of a long-run competitive equilibrium?
A)The market has a horizontal long-run supply curve.
B)Inputs employed in the industry cannot earn more in other industries.
C)Firms in the market earn high abnormal profits.
D)Firms face constant input costs irrespective of the output level.

Question

Quizplus · Accepted Answer

In long-run competitive equilibrium, firms in the market earn zero economic profits because inputs employed in the industry cannot earn more in other industries, meaning that firms cannot charge a price higher than the cost of production in the long run. This leads to a horizontal long-run supply curve, as firms can enter or exit the market to ensure that profits are driven down to zero. Input costs may fluctuate, but in the long run, they will adjust to the prevailing market conditions.

Which of the Following Is True of a Long-Run Competitive