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In perfectly competitive industries, firms earn zero economic profits in the long run due to the nature of competition and the entry and exit of firms.
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This concept is known as the zero economic profit condition or the long -run equilibrium in a perfectly competitive market.
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A perfectly competitive industry has several key features.
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Homogenous products, so all firms in the industry produce identical or nearly identical products which are considered perfect substitutes for consumers.
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This eliminates any differentiation among products.
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Many buyers and sellers, so there's numerous buyers and sellers in the market and no single firm has a significant market share.
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Both buyers and sellers have complete and accurate information about prices, products, and market conditions.
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Firms can easily enter or exit the industry without facing substantial barriers.
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And firms in a perfectly competitive market aim to maximize their profits.
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They'll adjust their production levels in response to market conditions...