when does a firm in the full competition earn normal profit?
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When does a firm in perfect competition earn normal profits?
Answer :
When a firm is in a perfect competition market, they are bound to keep their prices at the market price only, If they increase the price, they will surely lose the customers because other sellers are selling the product at a lower price.
In a perfect competition market, all the sellers sell same product, same size, colour, shape product and that's why one has to sell the product at the market price only.
Here, in this type of market, AR =MR
A firm in perfect competition earn normal profits when AR= MR.
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Answer:
Normal profit is a situation where a firm makes sufficient revenue to cover its total costs and remain competitive in an industry. In measuring normal profit, we include the opportunity cost of working elsewhere. When a firm makes normal profit we say the economic profit is zero.
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