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WAEC Economics 2011 Question 19

Question 19

Market Structures

A firm will shut down in the long run if its earning is

  1. A.less than normal profit.
  2. B.greater than normal profit.
  3. C.equal to super normal profit.
  4. D.less than super normal profit.
Show the answer and explanation

Answer: A (less than normal profit.)

Explanation

In the long run a firm must at least earn normal profit, otherwise it leaves the industry.