In a competitive market with identical firms.

In a competitive market with identical firms,
Answer
a.
free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.
b.
firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping.
c.
an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run.
d.
firms cannot earn positive economic profit in either the short run or long run.

Answer


a.
free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.
a.
free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.

economic profit is zero only in the long run because of free market entry.

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