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Explain the process that drives the economic profit to zero in the long run for a perfectly competitive firm?
In perfectly competitive markets, economic profits are zero in the long run because firms are able to enter and exit the market.
If firms in a perfectly competitive market are profitable, there would be an incentive for new firms to enter. Supply would increase, causing an increase in quantity and the price to be driven back down to equilibrium: NO PROFIT!
If firms in a perfectly competitive market are suffering a loss, some firms would choose to exit the market. Supply would decrease, causing a decrease in quantity and the price to be driven back up to equilibrium: NO PROFIT!
What else can I help you with?
When perfectly competitive firms in an industry are earning positive economic profits, how does this impact market equilibrium and the long-term sustainability of the industry?
When perfectly competitive firms in an industry are earning positive economic profits, it attracts new firms to enter the market, increasing competition. This leads to a decrease in prices and profits until they reach a long-term equilibrium where firms earn normal profits. This process ensures the long-term sustainability of the industry by preventing excessive profits and encouraging efficiency.
When the process of entry or exit ends in a perfectly competitive market?
The idea of a perfectly competitive market is that no one business or entity is large enough to hold power over a market or product. Zero entry and exit barriers make this possible, because it means that the market is ever changing as businesses fail and new companies emerge.
Communication of economic events is the part of the accounting process that involves?
Communication of economic events is the part of the accounting process that involves what
What is wrong with peaceful cooperative economic development?
It peacefully rips off the material base for further generation's survival for present generations' present interest. Regardless that is done by cooperative or competitive economic developments. Resources are intrinsically limited and the process of resources consumption is irreversible. But human survival and development inevitably depend on it.
The accounting process is concerned with internal and external transactions representing economic events?
The accounting process is concerned with both: internal and external transactions representing economic events.
When perfectly competitive firms in an industry are earning positive economic profits, how does this impact market equilibrium and the long-term sustainability of the industry?
When perfectly competitive firms in an industry are earning positive economic profits, it attracts new firms to enter the market, increasing competition. This leads to a decrease in prices and profits until they reach a long-term equilibrium where firms earn normal profits. This process ensures the long-term sustainability of the industry by preventing excessive profits and encouraging efficiency.
When will the process of entry and exit end in a perfectly competitive market?
In a perfectly competitive market, the process of entry and exit ends when firms earn zero economic profits in the long run. This occurs when the price equals the minimum average total cost, allowing firms to cover all their costs, including opportunity costs. At this point, there is no incentive for new firms to enter the market, and existing firms will not exit, stabilizing the market equilibrium. Thus, the market reaches a state of long-run equilibrium.
When the process of entry or exit ends in a perfectly competitive market?
The idea of a perfectly competitive market is that no one business or entity is large enough to hold power over a market or product. Zero entry and exit barriers make this possible, because it means that the market is ever changing as businesses fail and new companies emerge.
Which process does the opponent process thoery explain?
Color vision is the process that the opponent process theory explain.
How do you explain the process view of an organization?
explain abt the process view of an organization
Explain Process PCB and Proces state diagram?
explain process, pcb and process state diagram.
How do you explain the role of science in production process?
explain the role of science inproduction process
Explain what HR management is and how it relates to the management process?
explain what HR management is and how it relates to the management process
Illustrate the communication process and explain?
communication process
Illustrate the process of communication and explain?
communication process
Explain listing process with suitable example and Diagram?
1 Explain listing process with suitable example & Diagram
What is marginal economics explain?
the application of economic science in business decision making is all pervasive.more specifically, economic laws and tools of economic analysis are now applied a great deal in the process of business decision making. this has led,asmentioned earlier, to the emergence of a separate branch of study colled managerial economics.
