-The crucial aspect of competition among firms that leads to the condition of zero profits in the long run is

Question

Quizplus · Accepted Answer

Free entry and exit of firms in the industry ensures that profits in the long run will be driven to zero. This is because if firms are making positive profits, new firms will enter the market, increasing supply and driving prices down until profits are eliminated. Conversely, if firms are making losses, some will exit the market, reducing supply and driving prices up until losses are eliminated.

-The Crucial Aspect of Competition Among Firms That Leads to the Condition