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    Question

    In perfect competition, in the long run, firms

    will:
    A Earn supernormal profits Correct Answer Incorrect Answer
    B Earn losses Correct Answer Incorrect Answer
    C Earn normal profits Correct Answer Incorrect Answer
    D Face downward-sloping demand curves Correct Answer Incorrect Answer

    Solution

    In the long run, entry and exit of firms drive economic profits to zero, meaning firms earn just enough to cover their opportunity costsтАФnormal profits.

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