A perfectly competitive firm cannot make economic profits in the long run because:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are no barriers to entry or exit, meaning that new firms can easily enter the market and compete for profits. This means that as soon as a firm earns economic profits, new firms will enter the market, increasing supply and driving down prices until the economic profits are eliminated. Therefore, in the long run, a perfectly competitive firm cannot make economic profits.

A Perfectly Competitive Firm Cannot Make Economic Profits in the Long