If Kang's Knick-Knacks is a perfectly competitive firm and is making zero economic profits,
A) firms will enter the market.
B) firms will exit the market.
C) Kang's Knick-Knacks will stay in the market.
D) the market supply curve will shift to the left.
E) the market supply curve will shift to the right.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, making zero economic profits means that the firm is covering all its costs, including opportunity costs. This situation is considered normal and sustainable, so Kang's Knick-Knacks will stay in the market.

If Kang's Knick-Knacks Is a Perfectly Competitive Firm and Is