Question

Why will losses for firms in a perfectly competitive industry tend to vanish in the long run?

Short answer

Because an infinite number of businesses produce infinitely divided, homogeneous goods.

Step-by-step solution

Definition

Perfectly Competitive Markets:

It is considered that consumers have perfect information in a perfectly competitive market. To stay profitable in a completely competitive market, businesses must conform to specific market rules.

Explanation

Firms in an exceedingly perfectly competitive market can only make short-term profits or losses. Because an infinite number of enterprises produce infinitely-divisible, homogeneous items, profits and losses are eliminated within the future.