You can tell a firm is operating in a market that is in long-run competitive equilibrium if
A) economic profits are positive.
B) economic profits are negative.
C) accounting profits are negative.
D) accounting profits are zero.
E) economic profits are zero.

Question

Quizplus · Accepted Answer

In long-run competitive equilibrium, firms cannot earn economic profits, since there are no barriers to entry and firms will enter the market until economic profits are driven to zero. Therefore, the correct answer is that economic profits are zero.

You Can Tell a Firm Is Operating in a Market