Which of the following statements is TRUE?
| I. |
Free entry in a perfectly competitive industry results in the industry's firms earning zero economic profit in the long run, except for the most efficient producers, who may earn economic rent. |
| II. |
In a perfectly competitive market, long-run equilibrium is characterized byLMC < P < LATC. |
| III. |
If a competitive industry is in long-run equilibrium, a decrease in demand causes firms to earn negative profit because the market price will fall below average total cost.
|