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According to the source, what defines a long-run equilibrium in a perfectly competitive market?
AOnly one single firm remains in this market
BPrices change every single day without settling
CAll firms earn zero profit, where P = MR = MC = AC
DAll firms earn large economic profits forever
Answer & Solution
Correct answer: C. All firms earn zero profit, where P = MR = MC = AC
1. Long-run equilibrium is defined by two conditions holding at once.
2. Firms produce where price equals marginal revenue equals marginal cost, satisfying the profit-maximizing rule.
3. Price also equals average cost, meaning economic profits are driven to exactly zero.
4. This is not a single-firm outcome; it describes an entire competitive industry once entry and exit have finished adjusting.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.3 | Entry and Exit Decisions in the Long Run_
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