Question

Please help!!!

7. Short-run supply and long-run equilibrium Consider the competitive market for titanlum. Assume that, regardless of how many firms are in the Industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 T 90 80 70 50 40 30 20 AVC 10 0 10 20 30 40 0 70 80 0 100

Answer 1

Accounting profit is defined as total revenue less explicit costs.

Accounting profit:

Economic profit is defined as total revenue less the sum of implicit and explicit costs.

Economic profit:

or we can say

Now we know that a firm will run the business till its economic profit becomes zero.In that case accounting profit must

be positive.

So its False that assuming implicit cost are positive, each of the firms operating in the industry in long run earns negative profit.