Q.15.Under perfect competition, the firm earns normal profit in the long-run because of:
(a) large no. of buyers and sellers
(b) perfect knowledge about the market
(c) freedom of entry and exit of firms
(d) Homogeneous commodity
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(c) freedom of entry and exit of firms
Explanation:
In perfect competition, there is freedom of entry and exit. If the industry was making supernormal profit, then new firms would enter the market until normal profits were made. This is why normal profits will be made in the long run
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