96. Competitive firms will always try to earn more than a normal profit by doing the following except

A. adopting better production technology.
B. improving their business organization and operation.
C. developing new products.
D. raising the prices of their existing products.

Question

96. Competitive firms will always try to earn more than a normal profit by doing the following except

A. adopting better production technology.
B. improving their business organization and operation.
C. developing new products.
D.  raising the prices of their existing products.

BlackTom AI · Accepted Answer

Question restatement: Competitive firms will always try to earn more than a normal profit by doing the following except

Option A: adopting better production technology. This can lower average costs and improve efficiency, potentially increasing profits above normal through lower costs and higher output. Technology improvements are a classic route to achieving supernormal profits in the short or long run when market conditions allow it.

Option B: improving their business organization and operation. Enhancing management practices, logistics, and overall organizational efficiency can reduce costs or improve product quality, both of which can raise profits above the normal level. In perfect competition, cost reductions that lower average cost can enable profits above normal if prices are given.

Option C: developing new products. Innovation can create product differentiation or more desirable offerings, which can support higher prices or larger market share, leading to profits above normal. Even in competitive markets, product improvements or new features can enable temporary supernormal profits.

Option D: raising the prices of their existing products. In a competitive market with many sellers and identical products, firms are price takers and cannot raise prices without losing all customers to rivals. Therefore, attempting to raise prices would not be a viable path to higher profits and would not lead to supernormal profits in the long run. This makes raising prices the exception among the listed strategies.

In summary, A, B, and C describe ways firms can achieve profits above normal through lower costs, efficiency gains, or product improvements. D describes an action that competitive firms cannot sustain due to price-taking behavior and lack of market power, making it the exception.

ECNM1116.32924.202530 Microeconomics Final; Spring 2025, 100 Multiple Choice Questions

96. Competitive firms will always try to earn more than a normal profit by doing the following except A. adopting better production technology. B. improving their business organization and operation. C. developing new products. D. raising the prices of their existing products.

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