Because of easy entry into and exit from a market, in long-run equilibrium perfectly competitive firms
A) operate at higher cost levels than necessary
B) charge the highest price than they can because of differentiated products
C) are making losses
D) earn no economic profit

Question

Quizplus · Accepted Answer

In long-run equilibrium, perfectly competitive firms earn no economic profit due to the ease of entry and exit from the market. This ensures that any potential economic profits are competed away, leading firms to operate where price equals average total cost.

Because of Easy Entry into and Exit from a Market