Statement I: In the long run the perfect competitor sells at cost.
Statement II: In the long run some perfect competitors make an economic profit.

Question

Quizplus · Accepted Answer

In the long run, a perfectly competitive firm will produce where price (which equals marginal revenue) equals marginal cost. At this point, the firm will earn only a normal profit, meaning that its revenue will cover all of its economic costs, including the opportunity cost of the entrepreneur's time and capital. Therefore, statement I is true. However, in the long run, some firms in a perfectly competitive market may earn an economic profit if they have a lower cost structure than their competitors. These firms will continue to earn an economic profit until other firms enter the market, driving down the market price and reducing their economic profit to zero. Therefore, statement II is false.

Statement I: in the Long Run the Perfect Competitor Sells