The competitive dimension
The short answer: entry of new firms and exit of old ones. If profits are positive, new firms will enter the industry, piling in until they compete away all these profits. If long-term profits are negative, firms will exit until the price rises enough so that the firms who stay in the market can break even.
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
The competitive dimension
Earning profits
The short answer: entry of new firms and exit of old ones. If profits are positive, new firms will enter the industry, piling in until they compete away all these profits. If long-term profits are negative, firms will exit until the price rises enough so that the firms who stay in the market can break even.
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
A competitive advantage is something that allows one company to outperform competitors. One way to identify a competitive advantage is comparing profits. If one competitor has higher average profits, then it has some kind of competitive advantage.
Profit can make a company more effective and competitive in the market in various ways. The company will have more resources which it can pump into the business and do better promotions and adverts which will translate to even more profits.
When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
The general monopolistically competitive firm does earn profit. They earn point about as much as oligopolies.
by gaining profits
A monopolist must lower its quantity relative to a competitive market to maximize its profits because the monopolist already controls and owns the largest share of the market.
Profits - Expense = Savings and Investment Profits keep a business going as long is it is more than expense.