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28 Nov 2020
In a perfectly competitive industry, economic profit:
A. Can persist in the long run because of barriers to entry.
B. Can persist in the long run because of homogeneous products.
C. Will approach zero in the long run as prices are driven to zero.
D. Will approach zero in the long run as prices are driven to the level of average production costs.
Ā
D. Will approach zero in the long run as prices are driven to the level of average production costs.
Since the long-run profit-maximizing condition is the minimum of Long-run average total cost=Marginal Cost=Price, the firm earns zero economic profit in the long run.
In a perfectly competitive industry, economic profit:
A. Can persist in the long run because of barriers to entry.
B. Can persist in the long run because of homogeneous products.
C. Will approach zero in the long run as prices are driven to zero.
D. Will approach zero in the long run as prices are driven to the level of average production costs.
Ā
D. Will approach zero in the long run as prices are driven to the level of average production costs.
Since the long-run profit-maximizing condition is the minimum of Long-run average total cost=Marginal Cost=Price, the firm earns zero economic profit in the long run.
Garima MenonLv7
23 Jan 2021
