Why don’t firms in a competitive market have excess capacity inthe long run?

A. A competitive firm always produces as much as it can, becauseit knows that other firms will also produce at their maximumcapacity.

B. For the types of goods produced in competitive markets, it isdifficult to store any goods that cannot be sold immediately, so itdoes not make sense to invest in capital that provides thepotential to produce more than the market can consume.

C. For competitive firms, marginal revenue equals marginal costat the point where marginal cost equals average total cost.

D. Excess capacity exists only when firms are making economicprofits, and firms in competitive markets always earn zero economicprofit due to free entry and exit.

E. In the long run, competitive firms produce at a level atwhich price is lower than marginal revenue and earn zeroprofit.

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