Question

The basic model of pure competition reviewed in this chapter finds that in the long run all firms in a purely competitive industry will earn normal profits. If all firms only earn a normal profit in the long run, firms will develop new products or lower-cost production methods because they can do?

Answer 1

Companies must strive to improve their products and services within the framework of healthy competition.

Explanation:

The competition is a situation of companies that compete in a requested market or demanding the same product or service. This implies that companies must strive to improve the balance of normal earnings.

creating new products or new solutions of lower cost. In this sense, if companies can innovate, they can obtain economic gains in the short term, and increase their profits.