In the long run, the perfectly competitive firm:
A) always increases the output.
B) never increases the price.
C) never changes its fixed inputs.
D) can exit or enter the industry.

Question

Quizplus · Accepted Answer

In the long run, a perfectly competitive firm can enter or exit the industry as there are no barriers to entry or exit. This is because there are no economies of scale or other factors that would prevent new firms from entering the market or existing firms from leaving. The other choices are not necessarily true for a perfectly competitive firm in the long run. A firm may not always increase output because it may already be producing at its efficient scale, and it may not never change its fixed inputs if new technology or production methods become available. Additionally, while a perfectly competitive firm may never increase price on its own, market conditions such as changes in supply and demand can cause prices to fluctuate.

In the Long Run, the Perfectly Competitive Firm