In the long run,which of the following is true?
A)Profit effects are equal to cost effects.
B)Profit effects are larger than cost effects.
C)Cost effects are larger than profit effects.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

In the long run, firms cannot sustain abnormal profits as new firms will enter the market and competition will increase, reducing profits. Similarly, firms cannot sustain losses in the long run as they will exit the market, reducing supply and increasing prices. This means that in the long run, the profit effects and cost effects are equal, and the firms will make only normal profits.

In the Long Run,which of the Following Is True