Asked by Victoria Archie on Jul 13, 2024
Verified
In competitive markets where firms are observed to be exiting the market, the firms that remain will obtain economic profits in the long run.
Economic Profits
The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs.
Exiting
The process of leaving or withdrawing from a particular situation, status, or location, often used in the context of businesses or markets.
- Recognize the conditions leading to economic profits or losses for firms in competitive markets in the long run.
Verified Answer
EW
Esther WhangJul 17, 2024
Final Answer :
False
Explanation :
In competitive markets, the entry and exit of firms lead to a situation where, in the long run, firms earn zero economic profit, as prices adjust to reflect the costs of production, including normal profit.
Learning Objectives
- Recognize the conditions leading to economic profits or losses for firms in competitive markets in the long run.
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