Asked by Omaimah Al Yousef on Jul 24, 2024
Verified
In a long-run equilibrium where firms have identical costs, it is possible that some firms in a competitive market are making a positive economic profit.
Economic Profit
The difference between a company's total revenue and its total costs, including both explicit and implicit costs, representing the financial gain in excess of opportunity costs.
Competitive Market
A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.
- Attain an understanding of the distinctions and implications of economic and accounting profits in the context of business decision-making.
- Understand the scenarios that lead to no economic profitability in the long-term within markets characterized by perfect competition.
Verified Answer
CC
Charlize CastilloJul 25, 2024
Final Answer :
False
Explanation :
In a long-run equilibrium in a competitive market, firms cannot make positive economic profits because new firms will enter the market if existing firms are making a profit, driving prices down until profits reach zero.
Learning Objectives
- Attain an understanding of the distinctions and implications of economic and accounting profits in the context of business decision-making.
- Understand the scenarios that lead to no economic profitability in the long-term within markets characterized by perfect competition.
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