Effective price discrimination will enable a perfectly competitive firm to earn positive economic profits in both the short run and the long run.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and cannot set different prices for different consumers, which is necessary for price discrimination. Additionally, in the long run, economic profits tend to zero due to free entry and exit in the market.

Effective Price Discrimination Will Enable a Perfectly Competitive Firm to Earn