How does entry and exit affect long-run profits in perfect competition?

Entry and exit adjust output until price equals average variable cost, so firms break even at that level in the long run.

Entry increases industry profits by expanding market share and allowing firms to earn higher long-run profits.

Entry and exit eliminate economic profits so in the long run firms earn zero economic profit (price = minimum average total cost).

Entry and exit have no effect on long-run profits; profits are determined solely by firms' costs and demand.