{"id":51789,"date":"2024-04-15T23:29:51","date_gmt":"2024-04-15T23:29:51","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51789"},"modified":"2024-04-15T23:29:51","modified_gmt":"2024-04-15T23:29:51","slug":"under-perfect-competition-a-firm-may-earn-supernormal-profit-in","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/under-perfect-competition-a-firm-may-earn-supernormal-profit-in\/","title":{"rendered":"Under perfect competition a firm may earn supernormal profit in"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9796d14d366\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"true\">\r\n                    Short run                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Long run                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    Never                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    Always                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>A. Short run<\/strong><\/p>\n<p>In the short run, a firm under perfect competition may earn supernormal profit because it is able to produce at a lower cost than the market price. However, in the long run, new firms will enter the market, driving down prices and profits until they reach the normal level.<\/p>\n<p>Option B is incorrect because in the long run, firms will enter the market until profits are driven down to the normal level.<\/p>\n<p>Option C is incorrect because firms under perfect competition are able to earn supernormal profits in the short run.<\/p>\n<p>Option D is incorrect because firms under perfect competition are not able to earn supernormal profits in the long run.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li><strong>Option A: Short run<\/strong><\/li>\n<\/ul>\n<p>In the short run, a firm under perfect competition may earn supernormal profit because it is able to produce at a lower cost than the market price. This is because the firm has already made some fixed costs, such as <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> the cost of land and equipment, and these costs do not change in the short run. As a result, the firm can produce at a lower cost than the market price and earn supernormal profit.<\/p>\n<ul>\n<li><strong>Option B: Long run<\/strong><\/li>\n<\/ul>\n<p>In the long run, new firms will enter the market, driving down prices and profits until they reach the normal level. This is because new firms will be able to produce at the same cost as the existing firms, and they will compete with the existing firms for customers. As a result, prices will fall and profits will be driven down to the normal level.<\/p>\n<ul>\n<li><strong>Option C: Never<\/strong><\/li>\n<\/ul>\n<p>Option C is incorrect because firms under perfect competition are able to earn supernormal <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> profits in the short run.<\/p>\n<ul>\n<li><strong>Option D: Always<\/strong><\/li>\n<\/ul>\n<p>Option D is incorrect because firms under perfect competition are not able to earn supernormal profits in the long run.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/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":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Under perfect competition a firm may earn supernormal profit in<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/under-perfect-competition-a-firm-may-earn-supernormal-profit-in\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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