Competitive firm can earn economic profits over the long run.

Name: Competitive firm can earn economic profits over the long run.
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Question

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In a perfectly competitive market, firms can only earn normal profits in the long run. This means that total revenue equals total cost, including opportunity cost of the resources used in production. If a firm earns economic profits, it will attract new entrants to the market, increasing competition and driving down prices until economic profits are eliminated.

Competitive Firm Can Earn Economic Profits Over the Long Run