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In the model of perfect completion presented in Chapter 14 of the Mankiw text, in long...

In the model of perfect completion presented in Chapter 14 of the Mankiw text, in long run equilibrium, firms earn positive economic profit.

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Answer #1

Answer:

False.

Explanation:

In perfect competition, in long run equilibrium, firms earn ZERO ECONOMIC PROFIT.

In the long run some firms are enter and some are exit, this is happens in long term. Firms enters till there is positive profit, but in long run becouse of the entries of new firms portion of profit goes into that firms share. The entry and exit will stop when the profit will be zero. In the long run for competitive firm is zero. Becouse at that time MR=MC=ATC. In other word price is equal to the ATC.

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