A firm in a perfectly competitive market is making zero economic profit in the long run. It will have the incentive to :
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CUET-PG 2023 Shift 2 Question 36: Perfect competition
Answer and worked solution
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Perfect competition has come up 115 times in 7 exams since 2006.
What this question tests
This question is on Long-run equilibrium, entry and exit, part of Perfect competition in Microeconomics.
Why free entry drives profit to zero in the long run, and what that implies for the number of firms and industry supply.
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Question from the CUET-PG 2023 Shift 2 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.