Assertion (A) All firms under perfect competition in long run earn only normal profit. Reason (R) All firms under perfect competition in long run operate at the minimum average cost level.

The correct answer is: A. Both (A) and (R) are true.

In perfect competition, there are many firms producing identical products, and firms can enter and exit the market freely. This means that firms have no market power and must accept the market price. In the long run, firms will only earn normal profit, which is the minimum amount of profit necessary to keep firms in the market. This is because firms will enter the market if they can earn more than normal profit, and they will exit the market if they are earning less than normal profit.

In the long run, firms will also operate at the minimum average cost level. This is because firms will continue to expand production until their average cost is minimized. This is because firms will always want to produce at the lowest possible cost in order to maximize their profits.

Therefore, both (A) and (R) are true.

Here is a more detailed explanation of each option:

• Option A: Both (A) and (R) are true. This is the correct answer. In perfect competition, firms will only earn normal profit in the long run, and they will also operate at the minimum average cost level.
• Option B: (A) is true, but (R) is not true. This is not the correct answer. (A) is true because firms will only earn normal profit in the long run. However, (R) is not true because firms will not necessarily operate at the minimum average cost level in the long run. This is because firms may choose to produce at a higher level of output if they believe that they can charge a higher price and still earn a profit.
• Option C: (A) is not true, but (R) is true. This is not the correct answer. (A) is true because firms will only earn normal profit in the long run. However, (R) is not true because firms will not necessarily operate at the minimum average cost level in the long run. This is because firms may choose to produce at a higher level of output if they believe that they can charge a higher price and still earn a profit.
• Option D: Both (A) and (R) are false. This is not the correct answer. Both (A) and (R) are true.