Perfectly competitive markets are economically efficient in the long run, partly because Select one: a. entry barriers enable such firms to invest in high-return capital projects. b. firms in these industries produce an output where the price is equal to the minimum average variable cost. c. the price consumers are willing to pay for the last unit just equals the cost of having to produce that additional unit. d. entry and exit guarantees a positive long-run profit above average total cost for each firm.

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero. Also, firms produce at the minimum of the average total cost curve. price equal marginal cost and marginal revenue

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

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