Practice question · Match the pairs
Match each competitive concept to its meaning.
- Shutdown point
- Free entry/exit
- Drives economic profit to zero in the long run
- Long-run zero-profit condition
- : better to produce nothing
- Profit-maximising output rule
Hints
- Each concept concerns a different equilibrium condition.
- One explains why long-run profit is competed away.
Show the answer
- → Profit-maximising output rule
- → Long-run zero-profit condition
- Shutdown point → : better to produce nothing
- Free entry/exit → Drives economic profit to zero in the long run
Why
The four pillars of competitive equilibrium, price equals marginal cost, zero profit, shutdown condition, and entry/exit dynamics.
Practise Perfect Competition
The app has 9 more questions on this lesson, and keeps your place in the course. Business I is free to start.