In a competitive market,firms are price takers and will earn zero economic profit in the long run.

Question

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In a competitive market, firms are not able to influence the price of the product they sell because there are many other sellers offering similar products. As a result, firms have to accept the prevailing market price and cannot charge a higher price. This means that their profit margins are limited and they are not able to earn more than a normal rate of return in the long run. Therefore, they will earn zero economic profit in the long run, which is a characteristic of perfect competition.

In a Competitive Market,firms Are Price Takers and Will Earn