Which of the following is not a factor that automatically pushes firms in pure competition to earn only normal profits in the long run?
A)entry of new firms
B)exit of some firms
C)changes in the firms' plant size
D)changes in the market demand

Question

Quizplus · Accepted Answer

In pure competition, the entry of new firms (A) and the exit of some firms (B) both contribute to pushing profits toward a normal level by affecting supply. Changes in firms' plant size (C) can also adjust to meet demand efficiently, affecting long-run equilibrium. However, changes in market demand (D) do not automatically push firms to earn only normal profits, as these changes can temporarily create opportunities for above-normal or below-normal profits until the market adjusts.

Which of the Following Is Not a Factor That Automatically