In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Question

​In the long run, if we observe firms in a competitive market earning economic profits, we know that this market is in long-run equilibrium.

Quizplus · Accepted Answer

In the long run, a competitive market in equilibrium will see firms earning zero economic profit due to the entry and exit of firms, which drives profits to normal levels. Economic profits attract new firms, increasing supply and reducing prices until profits are eliminated.

​In the Long Run, If We Observe Firms in a Competitive

In the Long Run, If We Observe Firms in a Competitive