Asked by Allie Walker on Jun 11, 2024
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Firms in a perfectly competitive industry
A) will earn an economic profit of zero in the long run.
B) will always earn a profit in the short run.
C) may earn either an economic profit or a loss in the long run.
D) will always earn an economic profit in the long run.
Economic Profit
The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, reflecting the total financial gain.
Perfectly Competitive Industry
A market structure characterized by many buyers and sellers, free entry and exit, homogeneous products, and perfect information, leading to price takers on both the supply and demand sides.
- Comprehend the function of economic profits and losses in the context of a perfectly competitive market environment.
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Learning Objectives
- Comprehend the function of economic profits and losses in the context of a perfectly competitive market environment.
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