Which of the following statements is true?
A)In the long run firms in a market with perfect competition earn economic profits.
B)In the long run firms in a market with perfect competition earn zero economic profits.
C)Monopolists can earn economic profits in the short run only.
D)Monopolists earn only normal profits.

Question

Quizplus · Accepted Answer

In the long run, firms in a market with perfect competition earn zero economic profits due to the ease of entry and exit into the market. This results in firms only earning enough revenue to cover their costs, including opportunity costs. Option A is incorrect as firms do not earn economic profits in the long run in perfect competition. Option C is incorrect as monopolists can earn economic profits in the long run if barriers to entry exist. Option D is incorrect as monopolists can earn economic profits in the long run if demand for their product is inelastic.

Which of the Following Statements Is True