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प्रश्न
A perfectly competitive firm always enjoys normal profit in the long run, irrespective of the situation it faces in the short run. Discuss the statement in brief.
उत्तर
If firms enjoy a supernormal profit in the short run, new firms will enter the industry in the long run, which will cause an increase in the market supply. This will lead to a fall in the price of the commodity until it becomes equal to AC and each firm enjoys a normal profit.
If firms face losses in the short run, they will exit the industry in the long run, which will cause a decrease in the market supply. This will lead to a rise in the price of the commodity until it becomes equal to AC and each firm enjoys a normal profit.
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