a
earn excess profit
b
earn normal profit
c
break-even
d
expand their operations
Explanation
Correct Option
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Discussions (2)
NOTABENE2021
4 years ago
Option B is right.
Explanation: The first of the folds is entry and exit of firms into and out of the industry. This ensures that firms earn zero economic profit and that price is equal to average cost. The second of the folds is the pursuit of profit maximization by each firm in the industry.
Adaobiiiii
4 years ago
the correct answer is B
There is freedom of entry and exit under perfect competition. This means that in the long run, firms can only earn normal profits. In case a few firms earn super normal profits in the short run, new firms will enter the market. Market supply will increase and market price will fall, extra profits will be wiped out.
