Long-run equilibrium is characterized by zero profits in

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In the long-run equilibrium for both perfect competition and monopolistic competition, firms earn zero economic profits. In perfect competition, firms are price takers and cannot earn above-normal profits in the long-run due to barriers to entry being nonexistent. In monopolistic competition, firms can earn above-normal profits in the short-run due to differentiation, but entry of new firms into the market in the long-run drives down demand and erodes these profits, leading to zero economic profits. In the case of other market structures that have barriers to entry, such as monopolies and oligopolies, firms can earn above-normal profits in the long-run due to their market power.

Long-Run Equilibrium Is Characterized by Zero Profits in