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Nicole Dingess
on Nov 27, 2024

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Which of the following is not a factor that automatically pushes firms in pure competition to earn only normal profits in the long run?

A) entry of new firms
B) exit of some firms
C) changes in the firms' plant size
D) changes in the market demand

Normal Profits

The level of profit that is necessary for a business to remain competitive in the market, typically equal to the opportunity cost of the capital employed.

Plant Size

The capacity or physical dimensions of a facility where goods are manufactured or processed.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at different price levels.

  • Describe the relationship between market demand, economic profits/losses, and industry adjustments in the long run.
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Karanbir SinghNov 29, 2024
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