In many highly competitive sectors, such as agricultural markets and local service industries, firms frequently operate under conditions where they earn only normal profits in the long run. While some economists praise these competitive outcomes for maximizing consumer welfare, others argue that a lack of supernormal profit severely limits a firm's ability to remain efficient over time.
Evaluate the view that a firm earning only normal profit is failing to achieve economic efficiency.
156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.