answersLogoWhite

0

In the long run, if a firm is making a profit more firms will enter. This will cause profit to drop. Firms will eventually drop out because of this and economic profit will makes it way to zero(a result of the invisible hand).

User Avatar

Wiki User

14y ago

What else can I help you with?

Related Questions

In general monopolistically competitive frims earn profits?

The general monopolistically competitive firm does earn profit. They earn point about as much as oligopolies.


Why will a perfectly competitive firm not earn an economic profit in the long run?

A perfectly competitive firm will not earn an economic profit in the long run because in a perfectly competitive market, there are many firms selling identical products, leading to price competition. This competition drives prices down to the point where firms only earn enough revenue to cover their costs, resulting in zero economic profit.


How are a monopolistic firm and a competitive firm similar?

Monopoly means that there are no competitor for your product or servises


Is it true the demand curve of a monopolistic competitive firm is more elastic than that of a pure monopolist?

YES


Characteristics of a monopolistic competitive market?

one firm which sells a good price set by that firm hard for other firms to enter market


What happens to monopolistic competitive firm that begins to charge an excessive price for its product?

Consumers will substitute with a rival's product.


If a perfectly competitive firm's price is above its average total cost the firm?

is earning a profit


Why can a firm in monopolistic competition make an economic profit only in the short run?

A firm in monopolistic competition can make an economic profit only in the short run because in the long run, other firms can enter the market and offer similar products, increasing competition and driving down prices, which reduces the firm's ability to maintain high profits.


Bob and john are oligopolists in the market for ice cream. If Bob and John engage in a price war will the price of ice cream in their town be closer to Perfectly competitive market or a monopolistic?

Perfectly competitive, because both firms will compete to earn a greater market share (they are "price takers"), leading to prices that more closely resemble a perfectly competitive market than a monopolistic market (one dominant "price making" firm).


Dominos fast food firm is a monopolistic firm or not?

it is not a monopoly firm


What does the monopoly surplus graph reveal about the market power and economic efficiency of a monopolistic firm?

The monopoly surplus graph shows that a monopolistic firm has market power, meaning it can set prices higher than in a competitive market. This leads to economic inefficiency because the firm produces less and charges higher prices, resulting in a deadweight loss for society.


A purely competitive firm is precluded from making economic profit in the long run because?

it is a price taker