Economics · Business Economics
Given below are two statements: One is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): Every perfectly competitive firm in the long run earns normal profits only. Reason (R): Market price gets fully adjusted due to changes in demand and supply conditions, and the resultant free entry and exit of firms in a perfectly competitive market ensures that only normal profit persists. In the light of the above statements, choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both (A) and (R) are correct and (R) is the correct explanation of (A)✓
- 2Both (A) and (R) are correct but (R) is NOT the correct explanation of (A)
- 3(A) is true but (R) is false
- 4(A) is false but (R) is true
Correct answer
Both (A) and (R) are correct and (R) is the correct explanation of (A)
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