Asked by Lindsey Norberg on Jul 16, 2024
Verified
A competitive market will typically experience entry and exit until accounting profits are zero.
Accounting Profits
The difference between total revenue and explicit costs of a business, calculated according to standard accounting practices.
Competitive Market
A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product or service for which all sellers offer essentially the same good or service.
- Understand the dynamics of entry and exit in a competitive market and its impact on equilibrium.
Verified Answer
SO
Silvia OrtizJul 19, 2024
Final Answer :
False
Explanation :
In a competitive market, entry and exit continue until economic profits are zero, not accounting profits. Economic profits take into account both explicit and implicit costs, including opportunity costs, whereas accounting profits consider only explicit costs.
Learning Objectives
- Understand the dynamics of entry and exit in a competitive market and its impact on equilibrium.