Which of the following statements about pure competition is FALSE?
A) There is no nonprice competition.
B) Sellers can earn excess profits over the long run.
C) There is a very large number of sellers in the market.
D) The market demand curve for the product is downward sloping.

Question

Quizplus · Accepted Answer

In pure competition, sellers cannot earn excess profits over the long run because any short-term profits would attract new entrants, increasing supply and driving prices down until only normal profits are earned.

Which of the Following Statements About Pure Competition Is FALSE