Question

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies Group of answer choices positive economic profits in the long run. losses in the long-run equilibrium. zero economic profits in the long run. zero economic profits in both the short run and the long run. positive economic profits in both the short run and the long run.

Answer 1

Answer:

Zero economic profits in the long run.

Explanation:

In a perfect competition, firms are able to freely enter into, or exit a market.

As more and more firms enter the market, it causes an increase in supply in the long run, which leads to a fall in prices and therefore profits, such that firms will start to earn normal profits or zero economic profits.