[amp_mcq option1=”normal profits” option2=”super normal profits” option3=”production” option4=”costs” correct=”option3″]<\/p>\n
In perfect competition in the long run there will be no super normal profits.<\/p>\n
In perfect competition, there are many firms producing identical products, and firms are able to enter and exit the market freely. This means that firms have no market power and must accept the market price. In the long run, firms will earn normal profits, which is the return on capital that is just sufficient to keep firms in the industry.<\/p>\n
Super normal profits are profits that are above normal profits. They can occur in the short run when firms have market power, but they will eventually be competed away in the long run.<\/p>\n
Normal profits are necessary to keep firms in the industry. If firms were not earning normal profits, they would have no incentive to stay in the industry and would eventually exit. This would reduce the supply of goods and services, which would drive up prices and lead to higher profits for the remaining firms.<\/p>\n
In the long run, firms will earn normal profits because there is no barrier to entry or exit. This means that firms can enter the market if they see an opportunity to earn super normal profits, and they can exit the market if they are not earning normal profits. This competition will drive down prices and profits until only normal profits are being earned.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”normal profits” option2=”super normal profits” option3=”production” option4=”costs” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-46652","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n