Competitive Firms Earn Zero Profit in the Long Run When

question 37

Multiple Choice

Competitive firms earn zero profit in the long run when

• A) entry is completely free.
• B) entry is limited.
• C) Both A and B.
• D) Neither A or B.

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Definitions:

Monopoly

A market structure characterized by (1) a single seller of a well-defined product for which there are no good substitutes and (2) high barriers to the entry of any other firms into the market for that product.

Vigorous Competition

Vigorous competition refers to a market condition characterized by strong rivalry among firms, aiming to outperform one another in price, quality, and service.

Short Run

In economics, a period during which at least one input or factor of production is fixed, focusing on immediate outcomes.

Output Quantity

Refers to the total amount of goods or services produced by a company or within an economy during a specific time period.