Question

In​ long-run equilibrium, all firms in the industry earn zero economic profit. Why is this​ true? All firms in perfectly competitive industries earn zero economic profit in the long run because A. firms are price​ takers, maximizing profit by producing where total revenue equals total cost. B. if profit were​ positive, then firms would produce more​, increasing ​price, and if profit were​ negative, then firms would produce less​, decreasing price. C. firms are price​ takers, maximizing profit by producing where price equals marginal cost. D. if profit were​ positive, then firms would​ enter, decreasing​ price, and if profit were​ negative, then firms would​ exit, increasing price. E. barriers to entry and exit prevent firms from earning positive or negative economic profit.

Answer 1

Answer:

D. if profit were​ positive, then firms would​ enter, decreasing​ price, and if profit were​ negative, then firms would​ exit, increasing price.

Explanation:

Perfectly competitive firms are price takers, hence they cannot influence the price of their products.

Perfectly competitive industries have no barriers to entry or exist of firms ,so if in the short run, firms are earning economic profit, then firms would​ enter into the industry , decreasing​ price, and if profit were​ negative, then firms would​ exit, increasing price. This makes perfect competitive firms to earn zero economic profit in the long run.