Answer-first summary for fast verification
Answer: Perfect competition results in company profits converging to the investors' required rate of return.
Under perfect competition, firms earn only **normal profit**, which is the minimum return required by investors to provide capital. This occurs because the absence of barriers to entry and perfect information ensures that any economic profits are competed away, driving profits down to the cost of capital. Options A and B are incorrect because perfect competition is a realistic market structure (though idealized) and does not inherently cause industry failure; many industries thrive under competitive conditions.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
In a perfectly competitive market structure, which of the following statements is most accurate?
A
Perfect competition is an unrealistic theoretical construct.
B
Perfect competition inevitably leads to the failure of all industries due to insufficient profits.
C
Perfect competition results in company profits converging to the investors' required rate of return.
No comments yet.