Why does the firms in long run earn normal profits under perfect compe
Right Answer is: D
• Perfect competition- It is a theoretical market structure where markets have no influence on prices, all firms are price takers, the product is Identical & buyers and sellers have perfect information, firms can freely enter or exit the market, resources for labours are mobile etc.
• Freedom of entry and exit of the firms enables regular competition in a Perfect competition.
• Due to this reason a firms in long run earn normal profits under perfect competition.