Asked by Nicholas Paradas on Jul 30, 2024
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A firm operating in a perfectly competitive market may earn positive, negative, or zero economic profit in the long run.
Economic Profit
The difference between total revenue and total economic costs (including both explicit and implicit costs), reflecting a firm's financial performance.
Perfectly Competitive
A market structure characterized by many buyers and sellers, no barriers to entry, and a homogeneous product.
Long Run
A period in economics where all factors of production and costs are variable, allowing for full industry adjustment.
- Comprehend the fundamentals of economic and accounting profits, as well as their influence on corporate choices.
- Acquire knowledge about the conditions that cause a zero economic gain in the long run for businesses in perfectly competitive markets.
Verified Answer
Learning Objectives
- Comprehend the fundamentals of economic and accounting profits, as well as their influence on corporate choices.
- Acquire knowledge about the conditions that cause a zero economic gain in the long run for businesses in perfectly competitive markets.
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