In a long-run perfectly competitive equilibrium,

Question

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In a long-run perfectly competitive equilibrium, the typical firm will earn only a normal profit, which means that its total revenue equals its total cost, including a normal rate of return on its investment. If firms were earning an economic profit, new firms would enter the market and drive profits down, and if firms were incurring losses, firms would exit the market until prices rose to cover costs. Therefore, in the long run, firms in a perfectly competitive market will only earn a normal profit, which is just enough to keep them in business but not enough to make exceptional returns.

In a Long-Run Perfectly Competitive Equilibrium