Question

When all firms and potential firms in a market have the same cost curves, the long-run equilibrium of a competitive market with free entry and exit will be characterized by firms

Group of answer choices

facing the prospect of future losses.

operating at the efficient scale.

earning small but positive economic profits.

that work together to raise market prices.

Answer 1

Because this is an example of a perfectly competitive market they will not have positive profits in the long run where they will have normal profits and they cannot cooperate in raise market prices as market prices is dependent on supply and demand and there are also no future prospects losses because they would be running at normal profit level

Therefore (a,c,d) are wrong

All the firms would be running at an Efficient scale because they operate at normal level where the marginal cost meets the demand curve and that's why

(b) is the answer to this question

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