Question

In a long-run equilibrium where firms have identical costs, it is possible that some firms in a competitive market are making a positive economic profit. True or False

Answer 1

Answer: False

Explanation:

In the long run, if there are still firms making an Economic profit, this would encourage other firms to enter the market. Once this happens the firms would stop making an Economic profit. Should they start making an economic loss, some firms would leave the market which would then bring the Economic losses to zero.