If a market is close to perfect competition,profits may be
A) so low that companies do not have enough extra money to spend on long-run research.
B) so high that companies have no incentive to spend money on long-run research.
C) so low that companies have no incentive to spend money on long-run research.
D) so high that companies are not willing to risk any extra money on long-run research.

Question

Quizplus · Accepted Answer

Competition generally encourages innovative activities, unless competition is so fierce that profits are too low to fund innovative activities.

If a Market Is Close to Perfect Competition,profits May Be