Firms in an industry cannot earn long-run economic profits if:

Question

Quizplus · Accepted Answer

In the long run, firms in an industry will enter or exit the market as necessary to drive economic profits to zero. This is only possible when there is free entry and exit of firms in the industry, as in option C. Option A is not necessarily true, as fixed costs can still exist even if economic profits are zero. Option B is not true, as the number of firms in the industry can change in the long run. Option D is not complete, as minimizing production costs is necessary but not sufficient for eliminating economic profits in the long run.

Firms in an Industry Cannot Earn Long-Run Economic Profits If