[amp_mcq option1=”Short run” option2=”Long run” option3=”Never” option4=”Always” correct=”option1″]<\/p>\n
The correct answer is: A. Short run<\/strong><\/p>\n 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 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 Option C is incorrect because firms under perfect competition are able to earn supernormal profits in the short run.<\/p>\n Option D is incorrect because firms under perfect competition are not able to earn supernormal profits in the long run.<\/p>\n Here is a more detailed explanation of each option:<\/p>\n 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 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 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 Option C is incorrect because firms under perfect competition are able to earn supernormal profits in the short run.<\/p>\n 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":" [amp_mcq option1=”Short run” option2=”Long run” option3=”Never” option4=”Always” correct=”option1″]<\/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-51789","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n\n
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