In the long-run equilibrium, a competitive firm earns -

A. Super-normal profit
B. Profits equal to other firms
C. Normal profit
D. No profit
Answer» C. Normal profit
Explanation: Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. At this point each firm is making normal profits only. There is no further incentive for movement of firms in and out of the industry and a long-run equilibrium has been established.
Do you find this helpful?

View all MCQs in

Economics (GK)


No comments yet