Asked by Brianna Ellis on Jul 09, 2024

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A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run.

Accounting Profits

Accounting profits represent the financial gains of a business as calculated by revenue minus explicit costs, according to standard accounting practices.

Profit-Maximizing

A method or strategy that firms use to achieve the highest possible profit from their operations.

  • Grasp the concepts of economic profit, accounting profit, and their implications for firm decision-making.
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BS
Becca SlickJul 09, 2024
Final Answer :
False
Explanation :
In a competitive market, a profit-maximizing firm will earn zero economic profits in the long run due to free entry and exit, but it can still earn positive accounting profits. Economic profits account for both explicit and implicit costs, including opportunity costs, while accounting profits only consider explicit costs.