If free entry into an industry shifts each firm's downward sloping demand curve far enough to the left to eliminate all profits, then most of the so-called wastes of imperfect competition have been eliminated.

Question

Quizplus · Accepted Answer

Free entry into an industry leading to the elimination of profits does not necessarily eliminate the inefficiencies associated with imperfect competition, such as allocative and productive inefficiencies, or the potential for x-inefficiency and rent-seeking behavior.

If Free Entry into an Industry Shifts Each Firm's Downward