Suppose a Perfectly Competitive fiRm Is Making Supernormal Profits

question 15

Multiple Choice

Suppose a perfectly competitive firm is making supernormal profits. What is likely to happen in the long run?

• A) The firm will have to shut down production.
• B) The firm can increase its supernormal profits if it increases its output.
• C) The firm will continue to make supernormal profits.
• D) New entrants will compete away the firm's supernormal profits.

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Definitions:

External Reward

A reward that comes from outside an individual, such as money, praise, or awards, used to motivate behavior.

Activity Pursuit

The involvement and engagement in tasks or activities that are aimed at achieving specific goals or fulfilling interests.

Intrinsic Motivation

The drive to perform an activity for its inherent satisfaction rather than for some separable consequence.

Intrinsic Motivation

The drive to engage in an activity for its own sake, rather than for an external reward or outcome.