Write a two-page essay that explains why in perfect competition, there are no economic profits or losses in the long run.
Instructions
Write a two-page essay that explains why in perfect competition, there are no economic profits or losses in the long run.
Answer
IntroductionIn economics, there are different markets with different characteristics. One of the common markets in economics is perfect competition. The most significant characteristic of this market is that both buyers and sellers have full information about the market. Besides, the market does not exhibit the characteristics of a monopoly, since the market price of the commodity is beyond the control of either the buyers or the sellers. There are different characteristics of the market in the short-run and in the long-run. The markets feature in the short-run is that firms can experience profit and loss. In the long run, firms operating in the perfect competition market do not experience economic profits or losses in the long run.Perfect Competition in the Long runUnderstanding the chara...
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