Final answer:
Firms in a perfectly competitive industry do not differentiate their products and do not make long-run profits or incur short-run profits.
Step-by-step explanation:
Firms that operate in a perfectly competitive industry do not differentiate their products. In other words, all firms in a perfectly competitive industry sell the same product, so there is no room for product differentiation. This characteristic of perfectly competitive markets helps ensure that no single firm has the power to influence the market price.
Instead, firms in perfectly competitive markets focus on factors such as price, quality, and customer service to gain a competitive advantage. Since there is no product differentiation, firms in a perfectly competitive industry do not make long-run profits or incur short-run profits. Economic profits are driven down to zero in the long run as other firms enter the market and compete for customers.