Asked by Willow Stevens on Jul 13, 2024
Verified
A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.
Economic Profit
The total revenue of a business minus its explicit and implicit costs, showing the actual financial gain.
Opportunity Costs
The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on.
Perfectly Competitive
A market structure characterized by many buyers and sellers, all of whom are price takers with the product being homogeneous.
- Learn about the principles of economic and accounting profits, and their significance in the strategic choices of businesses.
- Grasp the elements influencing the lack of long-term economic profits in perfectly competitive market settings.
Verified Answer
Learning Objectives
- Learn about the principles of economic and accounting profits, and their significance in the strategic choices of businesses.
- Grasp the elements influencing the lack of long-term economic profits in perfectly competitive market settings.
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