Question

Which of the following is true in long-run equilibrium for both perfect competition and monopolistic competition?

		Long-run average cost is at a minimum.
		Economic profit is zero.
		Accounting profit is zero.
		Marginal cost equals price.

Answer 1

Answer

Option 2

Economic profit is zero

both markets have free entry and exit in the long run so the firms make zero economic profit in the long run as if a firm is earning profit in the short run then, in the long run, new firms enter the market up to the profit and zero and vice verse.