The correct answer is: B. short run abnormal profits are competed away by firms entering the industry.
In perfect competition, there are many firms producing identical products. This means that firms have no control over the price of their product, and they must accept the market price. The market price is determined by the intersection of the demand and supply curves.
In the short run, firms can make abnormal profits if the market price is above the average cost of production. However, in the long run, firms will enter the industry if there are abnormal profits to be made. This will increase the supply of the product, which will lower the market price. As the market price falls, firms will start to make normal profits, which are profits that are just enough to keep firms in the industry.
Option A is incorrect because firms will not leave the industry in the long run if there are abnormal profits to be made. Option C is incorrect because the government does not compete in the market in perfect competition. Option D is incorrect because greater advertising does not affect the market price in perfect competition.