0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
A purely competitive firm is precluded from making economic profit in the long run because?
it is a price taker
Can a monopolistic competitive firm earn long run profit?
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).
Will economic profit exceed accounting profit?
Economic profit will never exceed accounting profit. The accountant will calculate total cost using only explicit costs (basically a transfer of money) that the firm makes. On the other hand, economists will factor in opportunity cost as well. For example, if a person takes their life's savings and invests it in a new company, the interest that the money could be making will be an opportunity cost for the firm, as well as the salary they could be earning at a different firm. This all means that economists will calculate higher costs, which means that economic profit is lower than accounting profit.
Is economic profit a cost of production?
Economic profits are not costs of production since the entrepreneur does not require the gaining of an economic profit to keep the firm operating. In economics, costs are whatever is required to keep a firm operating.
Why might a firm continue to operate when they are not making profits at the moment?
Profits can fluctuate. Just because a firm is not making a profit at the moment does not mean that they won't be making a profit in the future. Hope springs eternal.
A purely competitive firm is precluded from making economic profit in the long run because?
it is a price taker
What is the Difference between Normal profit and Economic Profit?
In economics, normal profit is often called the break-even point. It is the level of profit where all of the costs of your business, including the salary of the CEO, are covered. When a firm has normal profit but not economic profit, the total revenue of the firm equals the total cost of the firm. However, if a firm has economic profit, total revenue is higher than total cost.
Can a monopolistic competitive firm earn long run profit?
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).
Will economic profit exceed accounting profit?
Economic profit will never exceed accounting profit. The accountant will calculate total cost using only explicit costs (basically a transfer of money) that the firm makes. On the other hand, economists will factor in opportunity cost as well. For example, if a person takes their life's savings and invests it in a new company, the interest that the money could be making will be an opportunity cost for the firm, as well as the salary they could be earning at a different firm. This all means that economists will calculate higher costs, which means that economic profit is lower than accounting profit.
Is economic profit a cost of production?
Economic profits are not costs of production since the entrepreneur does not require the gaining of an economic profit to keep the firm operating. In economics, costs are whatever is required to keep a firm operating.
Why might a firm continue to operate when they are not making profits at the moment?
Profits can fluctuate. Just because a firm is not making a profit at the moment does not mean that they won't be making a profit in the future. Hope springs eternal.
The differences between goal of a firm and profit maximization?
A goal of firm isn't always profit driven, it can be any cause. Profit maximization is revenue driven, making more money is it focus.
Economic function of profits and losses?
Economic profit will never exceed accounting profit. The accountant will calculate total cost using only explicit costs (basically a transfer of money) that the firm makes. On the other hand, .
What is 'value of a firm'?
The 'value of a firm' is connected with profit maximization. It is the present value of the firm's current profit and the future profit. It determines the value accurately.
What is a firm's value?
The 'value of a firm' is connected with profit maximization. It is the present value of the firm's current profit and the future profit. It determines the value accurately.
The circular flow of economic activity sHow is the interdependency of firm and household decision making?
The circular flow of economic activity shows the interdependency of firm and household decision making.TrueFalse TRUE
If the firm's sales revenue income exceeds its expenses the firm has earned a profit?
If a firm's sales revenue exceeds its expenses, the firm has earned a profit.
