Asked by Hannah Emmett on Apr 28, 2024
Verified
If a firm in a perfectly competitive industry is experiencing higher than normal returns,in the long-run
A) Some firms will leave the industry and price will rise
B) Some firms will enter the industry and price will rise
C) Some firms will leave the industry and price will fall
D) Some firms will enter the industry and price will fall
Perfectly Competitive
Describes a market structure where all firms sell identical products, there are many buyers and sellers, and no single entity can influence the market price.
Industry Experience
Refers to the practical knowledge and insight gained through direct involvement and work within a specific industry.
Normal Returns
The minimum profit necessary for a company to remain competitive in the market, essentially covering opportunity costs.
- Determine the elements that influence the entrance and departure of companies within a competitive marketplace.
- Gain an understanding of the dynamics of economic profits and how they dwindle to nothingness in competitive markets as time progresses.
Verified Answer
Learning Objectives
- Determine the elements that influence the entrance and departure of companies within a competitive marketplace.
- Gain an understanding of the dynamics of economic profits and how they dwindle to nothingness in competitive markets as time progresses.
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