Verified Answer
For firms operating in a perfectly competitive market, the opportunity cost is the normal profits earned in the market. Any increase or decrease in the profits above or below the normal profits causes firms to enter and exit the market.

In case super-normal profits exist in competitive markets, firms would be induced to enter the market since the opportunity cost of not doing so would be higher. An increase in the number of firms raises the supply and lowers the price till the profits return to normal profits. Similarly, if losses exist in the markets, firms would be induced to exit the market since the opportunity cost of staying in the market would be higher. A decrease in the number of firms lowers the supply and raises the price till the profits return to normal profits. As such, in the long run, the firm would only earn normal profits, and the entry and exit will take place whenever positive economic profits or losses occur.