Economics · Microeconomics
Why does a firm in a perfectly competitive market continue to operate in the long run despite earning only normal (zero economic) profits?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Because all competing firms operate under identical cost conditions
- 2Because the implicit costs (opportunity costs) of self-owned factors are fully covered✓
- 3Because the firm achieves maximum productive efficiency in the long run
- 4Because the firm operates at a socially optimal level of output
Correct answer
Because the implicit costs (opportunity costs) of self-owned factors are fully covered
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