Commerce Exam > Commerce Questions > Under which market condition firms make only ...
Start Learning for Free
Under which market condition firms make only Normal Profit in the long run?
- a)Oligopoly
- b)Monopoly
- c)Monopolistic competition
- d)Duopoly
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Under which market condition firms make only Normal Profit in the long...
In the long-run, the demand curve of a firm in a m
onopolistic competitive
Most Upvoted Answer
Under which market condition firms make only Normal Profit in the long...
Because in monopolistic competition ,
Free Test
FREE
| Start Free Test |
Community Answer
Under which market condition firms make only Normal Profit in the long...
Monopolistic Competition
Monopolistic competition is a market condition in which firms make only normal profit in the long run. Here is why:
Large number of firms
- In monopolistic competition, there are a large number of firms competing with each other. This prevents any single firm from exerting significant market power to influence prices.
Product differentiation
- Firms in monopolistic competition differentiate their products through branding, packaging, quality, and other features. This creates a certain degree of market power for each firm, allowing them to charge a price slightly above the marginal cost.
Free entry and exit
- Due to the low barriers to entry and exit in monopolistic competition, firms can easily enter or exit the market in response to profit opportunities. This prevents firms from earning excessive profits in the long run.
Zero economic profit
- In the long run, firms in monopolistic competition earn only normal profit, where total revenue equals total costs. Any excess profits would attract new firms to enter the market, driving down prices and eliminating the profit opportunity.
Overall, in monopolistic competition, firms compete with each other based on product differentiation, but they are unable to sustain long-term economic profits due to the presence of competition and free entry and exit.
Monopolistic competition is a market condition in which firms make only normal profit in the long run. Here is why:
Large number of firms
- In monopolistic competition, there are a large number of firms competing with each other. This prevents any single firm from exerting significant market power to influence prices.
Product differentiation
- Firms in monopolistic competition differentiate their products through branding, packaging, quality, and other features. This creates a certain degree of market power for each firm, allowing them to charge a price slightly above the marginal cost.
Free entry and exit
- Due to the low barriers to entry and exit in monopolistic competition, firms can easily enter or exit the market in response to profit opportunities. This prevents firms from earning excessive profits in the long run.
Zero economic profit
- In the long run, firms in monopolistic competition earn only normal profit, where total revenue equals total costs. Any excess profits would attract new firms to enter the market, driving down prices and eliminating the profit opportunity.
Overall, in monopolistic competition, firms compete with each other based on product differentiation, but they are unable to sustain long-term economic profits due to the presence of competition and free entry and exit.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Top Courses for CommerceView all
Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer?
Question Description
Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer?.
Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Under which market condition firms make only Normal Profit in the long run?a)Oligopolyb)Monopolyc)Monopolistic competitiond)DuopolyCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup