In the long run with free entry and exit and identical firms, are competitive firms' profits positive, zero, or negative?

Free Entry

A market condition where firms can enter the industry without any barriers to entry, promoting competition.

Exit

In economic terms, the process of withdrawing from a market, ceasing operations, or ending an investment.

Evaluate the conditions for long-run equilibrium in competitive markets and the adjustment process following changes in demand.

Verified Answer

Final Answer :

Long-run profits are zero under these conditions.

Learning Objectives

Evaluate the conditions for long-run equilibrium in competitive markets and the adjustment process following changes in demand.