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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why does the Process of Supernormal Profit --> Normal Profit Important in a Monopolistic Competition Industry? -What can this lead to?

Author: eric_galvao



Answer:

-If it takes a Long Time, then the Market is looking like a Monopoly -If it takes a Short Time, then it looks like a Perfectly Competition -Firms spend Lots of Money to Differentiate their Profit (Improving or Brand Image) in order to Keep their Price-Making Power and a Supernormal Profit


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