Question

In the short-run purely competitive firms earn ______ in equilibrium while in the long-run firms earn ______ in equilibrium, respectively. a. Normal profits, economic profits b. Profits or losses, profits or losses c. profit, normal profit d. Profits or losses, normal profit Creative destruction a. stimulates growth. b. contributes to the production of new goods. c. forces firms to be innovative. d. does all of the above.

Answer 1

In the short-run purely competitive firms earn profits or losses in equilibrium while in the long-run firms earn normal profit in equilibrium, respectively.

What is purely competitive firms?

• A marketing scenario where several companies sell the same product and cannot differentiate themselves from one another; as a result, no business has a substantial impact on pricing.
• The ease with which new businesses can enter the market and great market knowledge are further existing factors.
• The perfectly competitive business would want to produce as much as possible in the near term where profits are highest or, if profits are not attainable, where losses are lowest.
• In this instance, the term "short run" refers to a scenario in which businesses produce with a single fixed input and suffer fixed production expenses.
• The portion of a business's marginal cost curve that is above the minimum level of its average variable cost (AVC) curve is the short-run supply curve for a perfectly competitive firm.

Learn more about purely competitive firms refer to :

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