The perfect competitor produces at peak efficiency in the long run,

A) because any profits in the short run would attract new firms to the market in the long run until profits are eliminated.
B) because any losses in the short run would force some existing firms to leave the market in the long run until losses are eliminated.
C) Both of the above choices are true.

In a perfectly competitive market, firms earn normal profits in the long run due to free entry and exit. If there are profits in the short run, new firms would be attracted to the market, increasing supply and driving down prices until all firms earn only normal profits. On the other hand, if there are losses in the short run, some firms would exit the market, reducing supply and driving up prices until all firms earn only normal profits. Therefore, in the long run, the perfectly competitive firm produces at peak efficiency, where its costs of production are minimized and it earns only normal profits.