What is happening in this perfectly competitive firm if the market price is P3?
a. In the short run and the long run the firm only makes positive accounting profits.
b. In the short run and the long run firms will have normal profits
c. In the short run the firm will make normal profits and in the long run the firm will make positive economic profits
d. In the short run the firm will make positive economic profits but in the long run the firm will have negative economic profits.
e. In the short run firms will have positive economic profit but in the long run firms will enter the market and drive profits back to normal
Answer: e. In the short run firms will have positive economic profit but in the long run firms will enter the market and drive profits back to normal
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