Asked by
ISSL I Pasanaa
on Nov 04, 2024
Verified
Because of free entry and exit, firms in a perfectly competitive market cannot earn a profit in the short run.
Free Entry And Exit
Conditions in a market where firms or producers can freely enter or leave the market without facing any legal, social, or economic barriers.
Perfectly Competitive Market
A market structure where many firms sell identical products, leading to price taking behaviour by all firms.
Short Run
A period of time in which at least one input, such as equipment or buildings, is fixed and cannot be changed.
- Comprehend how the ability of firms to freely enter or exit affects their profitability in markets characterized by perfect competition.
Verified Answer
DD
Learning Objectives
- Comprehend how the ability of firms to freely enter or exit affects their profitability in markets characterized by perfect competition.