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Home / Questions / Q 1436
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Under which market condition, firms make a normal profit in the long r

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| Under which market condition, firms make a normal profit in the long run?

A. Perfect competition

B. Monopoly

C. Oligopoly

D. None of the above

Right Answer is: A

SOLUTION

  • The perfect competitive market is characterized by free entry and exit of firms. Hence, competitive firms always incur normal profits.
  • The characteristics of a perfectly competitive market include homogenous products & perfect information about products.
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    1. Under which market condition, firms make a normal profit in the long r

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