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Supernormal profit attracts entry of new firms because knowledge is everywhere and also the main aim of any producers is to make profit.
Let say for example that there is a market where one producer make a superprofit otherwise said his revenue is greater than his cost of production -in other words after selling his products- his revenue allow him to pay both fixed and variable costs and save an extra money.
This situation will definetely compell another producer who is interested by the same market to enter in (because of the existence of the information which is free to obtain and available to anyone)and also try to make his own supernormal profit. and theinformation will therefore flow from on producer to another and so on.
Remember the competition market states that there are no barriers to enter and exit from the market, outputs are homogeneous, no dicrimination between buyers and sellers.
The competition market is only a Theoretical Ideal! the reality is completely different
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Why monopoly firms make supernormal profit in long run?
because , because , because , because , because, because, do it your self you lazy c**t
Supernormal profit of monopolistic competition?
In the short run, abnormal profits exist but in the long run, it gets eroded away because new firms enter the industry.
Types of profits in the long run in oligopoly?
Supernormal profits due to high barriers to entry. Profits in the long run are determined by the barriers to entry. If there is high barriers to entry, new firms cannot enter the industry easily and hence cannot competed with existing firms for profits. Existing firms would be able to enjoy supernormal profits. On the contrary, weak barriers to entry means that the long run profits would be competed away by new firms entering the industry, hence firms would earn normal profits. Oligopoly market is characterised by high barriers to entry, largely due to non-price competition such as branding, advertising, etc. High barriers could also be due to economies of scale and high fixed cost.
Firms in an industry will not earn long-run economic profits if?
In long run under perfect competition new firms enters into the market and share the profit of existing firms due to free entry and exit .the new firms in the long run enters into the market until they earn profit and leaves the market if they suffer looses. In short if there is free entry and exit
What are the feature of oligopoly?
Features of Oligopoly.The important features of oligopoly are given as follow :1. Few Sellers2. Homogeneous or differentiated products3. Entry is possible but difficult4. Interdependence5. Uncertainty6. Indeterminateness7. Price rigidity8. Non price competition9. Tendency to form cartel10. Close substitutes
Why monopoly firms make supernormal profit in long run?
because , because , because , because , because, because, do it your self you lazy c**t
Supernormal profit of monopolistic competition?
In the short run, abnormal profits exist but in the long run, it gets eroded away because new firms enter the industry.
Types of profits in the long run in oligopoly?
Supernormal profits due to high barriers to entry. Profits in the long run are determined by the barriers to entry. If there is high barriers to entry, new firms cannot enter the industry easily and hence cannot competed with existing firms for profits. Existing firms would be able to enjoy supernormal profits. On the contrary, weak barriers to entry means that the long run profits would be competed away by new firms entering the industry, hence firms would earn normal profits. Oligopoly market is characterised by high barriers to entry, largely due to non-price competition such as branding, advertising, etc. High barriers could also be due to economies of scale and high fixed cost.
Firms in an industry will not earn long-run economic profits if?
In long run under perfect competition new firms enters into the market and share the profit of existing firms due to free entry and exit .the new firms in the long run enters into the market until they earn profit and leaves the market if they suffer looses. In short if there is free entry and exit
What are the feature of oligopoly?
Features of Oligopoly.The important features of oligopoly are given as follow :1. Few Sellers2. Homogeneous or differentiated products3. Entry is possible but difficult4. Interdependence5. Uncertainty6. Indeterminateness7. Price rigidity8. Non price competition9. Tendency to form cartel10. Close substitutes
Why do firms produce multiple products?
Firms produce multiple products because the aim is to be a producer that maximizes profit. Firms produce multiple products to get maximum profit.
Conditions that prevent the entry of new firms in a monopoly market are?
Barriers to entry.
What has the author Geoff Stewart written?
Geoff Stewart has written: 'Strategic entry interactions involving profit-maximising and labour-managed firms' 'Labour-managed firms and monopsony power' 'Capital ownership and the employment relation' 'Wage-productivity margins and market structure' 'Profit-sharing in Cournot-Nash oligopoly' 'Cyclical variations in the labour input'
Why and How Firms Internationalize?
expand sales and increase profit
Who adopts single entry system?
Small firms
Microeconomic factors affecting profit making firms?
i dont know what does profit affect microeconomics
Can a monopolistic competitive firm earn long run profit?
In the long run, if a firm is making a profit more firms will enter. This will cause profit to drop. Firms will eventually drop out because of this and economic profit will makes it way to zero(a result of the invisible hand).
