1)How do the entry and exit of firms in a purely competitive industry affect resource flows

and long-run profits and losses?

2)Explain how entry and exit help to improve resource allocation in pure Competition.

3) A basic model of pure competition reviewed in this chapter finds that in the long run all

firms in a purely competitive industry will earn normal profits. If all firms will only earn

a normal profit in the long run, why would any firms bother to develop new products or

lower-cost production methods? Explain