Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Why is
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Introduction
Perfect competition is a market situation where average revenue and marginal revenue are equal and equal to the price. Under perfect competition, in the short run, a firm may achieve profit, loss, and supernormal profit. But in the long run, a firm can only achieve normal profit. When the price is higher than the average cost then the firm will get a profit. In the same way, if the price is less than the average cost then the firm will get a loss. If the price is equal to the average cost then the firm will get normal profit or no profit no loss.
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