CIMA BA1 · Chapter 7 · Question 5 of 11
Which of the following is NOT a characteristic of a perfectly competitive market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Firms can earn supernormal profits in the long run
Explanation
In perfect competition, free entry means that any supernormal profits attract new firms, increasing supply and reducing price until only normal profit is earned in the long run.
More Costs, revenue and market structures MCQs
- Q7In the short run, a perfectly competitive firm making a loss should continue to produce as long as:
- Q8Compared with a perfectly competitive industry with the same cost conditions, a profit-maximising monopolist will normally:
- Q9The kinked demand curve model of oligopoly is used to explain:
- Q10In long-run equilibrium under monopolistic competition, a typical firm:
- Q11A monopolist faces the demand curve P = 100 - 2Q, giving marginal revenue MR = 100 - 4Q. Its total cost is TC = 500 + 20Q. What is the…