/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.27 What price will a perfectly comp... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 8: Q.27 (page 212)

What price will a perfectly competitive firm end up charging in the long run? Why?

Short Answer

Expert verified

In a completely competitive market, a business will charge a price at which it makes no economic profit in the long term.

Step by step solution

01

Perfect Competition : 

Perfect competition is a market system with a high number of customers and sellers, buying and selling homogenous items, and having free entrance and exit.

02

Explanation : 

As entrance and existence are both free in the long term, companies cannot charge a price that would yield an abnormal profit because this will entice firms to enter the sector, putting downward pressure on the price by increasing supply. The market is in equilibrium when all enterprises generate zero economic profit or normal profit, as previously stated. As a result, enterprises will charge a price at which they all make a typical profit in the long term.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Can you name five examples of perfectly competitive markets? Why or why not?

How does the average cost curve help to show whether a firm is making profits or losses?

Will a perfectly competitive market display allocative efficiency? Why or why not?

What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?

Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.