If supernormal profits are competed away under perfect competition, why will firms have an incentive to become more efficient?
Answer to relevant QuestionsIs it a valid criticism of perfect competition to argue that it is incompatible with economies of scale?Give three examples of oligopolistic industries. In what ways do the firms in each of these industries compete? Why do they choose to compete in the way that they do?A firm under monopoly or oligopoly that aims to maximize sales revenue will tend to produce more than a firm that aims to maximize profits. Does this conclusion also apply under (a) perfect competition and (b) monopolistic ...What factors could cause a rise in the market rate ofinterest?Why might it be argued that a redistribution of consumption, while not involving a Pareto improvement, could still be desirable?
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