Which statement is true?

Question

Quizplus · Accepted Answer

In the long run, the perfect competitor makes zero economic profit due to the absence of barriers to entry and exit. In the long run, firms will enter the market if there are economic profits to be made, increasing competition and driving down prices until only normal profits remain. Choice A is incorrect because in a perfectly competitive market, no individual firm can set the price. Choice B is incorrect because perfect competitors sell at market price. Choice C can be true in the short run but not necessarily in the long run as the firm may reach a point of minimum efficient scale where ATC is no longer falling.

Which Statement Is True