Explain the implication of the feature 'freedom of entry and exit to firms' under perfect competition.

There is freedom of entry and exit to firms in perfect competition. This implies that under perfect competition, in long run firms earn only normal profits so new firms does not enter or exit the market in long run. The firms in perfect competition do not earn supernormal profits or losses in long run. It is only in short run that the firms enter or exit the market.

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