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Why profit vary among firms?
s vary among firms? support each theory with practical five examples
Why must profits be zero in long-run competitive equilibrium?
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.
Why do firms engage in the activity of production?
to acquire profits
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.
Suppose a good or service Oh s highly desired but the quantity supplied is limited How does competition among consumers affect profits for the selling firms?
When a good or service is highly desired but the quantity supplied is limited, competition among consumers typically drives prices higher. As consumers compete for the limited quantity, they may be willing to pay more, which can significantly increase the profits for selling firms. This heightened demand can lead firms to maximize their pricing strategies, capitalizing on the scarcity. Consequently, firms can see substantial profit margins until supply can potentially adjust to meet the demand.
Why profit vary among firms?
s vary among firms? support each theory with practical five examples
What is the relevance of Indian accounting standards in IT firms?
The relevance of Indian accounting standards in IT firms is that it helps in business computations. This will be used to measure the profits of IT firms and keep proper records among other things.
Why do Firms trying to avoid competition?
Firms try to avoid competition so that they can set higher profits and earn greater profits.
Why must profits be zero in long-run competitive equilibrium?
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.
Why do firms engage in the activity of production?
to acquire profits
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.
Types of profits in the long run in oligopoly?
Supernormal profits due to high barriers to entry. Profits in the long run are determined by the barriers to entry. If there is high barriers to entry, new firms cannot enter the industry easily and hence cannot competed with existing firms for profits. Existing firms would be able to enjoy supernormal profits. On the contrary, weak barriers to entry means that the long run profits would be competed away by new firms entering the industry, hence firms would earn normal profits. Oligopoly market is characterised by high barriers to entry, largely due to non-price competition such as branding, advertising, etc. High barriers could also be due to economies of scale and high fixed cost.
Which statements is true about profits in a monopolistically competitive market?
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
What is the definition of expanding industry?
An industry whose firms earn economic profits and for which an increase in output occurs as new firms enter the industry.
What developments eroded securities firms' profits in the late 1980s?
Banks, insurance companies, and investment advisors, among others, all began competing for a piece of the securities market pie in the late 1980s
What are the key differences between monopolistic competition in the short run and long run?
In the short run, firms in monopolistic competition can make profits or losses due to varying demand and costs. In the long run, firms can only make normal profits as new firms enter the market, increasing competition.
Firms that want to maximize profits produce?
More, at less cost than their competition.
