In a competitive market with identical firms,

(A) free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.
(B) firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping.
(C) an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run.
(D) firms cannot earn positive economic profit in either the short run or long run.

(A) free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.

Explanation:

In a competitive market with identical firms and no barriers to entry or exit of firms, in the long run, firms would earn zero economic profit. If in the short run, firms are earning economic profit, new firms would enter into the industry and drive economic profit to zero.

Conversely if In a competitive market with identical firms, firms are making economic loss in the short run, in the long run Firms would exit the firms and economic profit would rise to zero.

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