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Normal Profits and Price Takers

Normal Profits and Price Takers - to quit or exit and...

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Normal Profits and Price Takers: Finally, though the price is fixed and a firm has to accept it as given, such price ensures normal profits for the firm. These profits are economic profits and enable a firm to cover all its explicit and implicit costs. In the short run more efficient firms may make Super Normal profits but these will not continue in the long run. On the other hand, if some firms are suffering Sub Normal profits or losses they will have
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Unformatted text preview: to quit or exit and discontinue production in the long run. All firms in a competitive market make only normal profits in the long run. Because of fixed and uniform price and normal price conditions, individual firms are called Price Takers . They have to accept the market price as given. Therefore, they are not Price Makers....
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