Answer
In the short run, firms in purely competitive markets are able to earn supernormal or abnormal profits, but in the long run, a long run equilibrium would be reached, where firms will earn normal profits.
Work Step by Step
Since the revenue curve in a purly competitive
firm is dertermined by the market forces of demand and supply in the industry, in the short run the revenue curve is able to fall above or below the firm's average cost curve.
If the revenue curve is above the cost curve, the firm would earn supernormal profit. This would attract other firms into the industry (as there are no barriers to entry) and thus the industry supply increases, moving the revenue curve toward the average cost curve, as equilibrium price drops.
The converse is true, as if a firm is earning subnormal profits, some firms in the industry would leave and thus the industry supply would decrease, causing equilibrium price to go up and thus moving the revenue curve toward the average cost curve.
In the long run, an equilibrium would be reached, where the right number of firms exist in the industry where they all earn normal profit, and there is no incentive for firms to join or leave the industry.
