Question

Please help with these questions,

Question 11 0.16 pts If Firm A is making zero economic profits, Firm A is breaking even when opportunity cost is taken into consideration. O Firm A is also making negative accounting profits. other firms want to enter the market. Firm A wants to shut down in the short run. O Firm A wants to leave the market. Question 12 0.16 pts If firms in a competitive market are making positive economic profits, the long-run market supply curve O is above the point where the short-run market supply curve and the demand curve intersect. O shifts downward. O and the short-run market supply curve and the demand curve all intersect at the same point. O shifts upward. O is below the point where the short-run market supply curve and the demand curve intersect. Question 13 0.16 pts An example of an implicit cost is a payment on an electricity bill O a payment on the loan for a piece of equipment not in use O gasoline costs. O forgone wages. O wages paid to employees.

Answer 1

Q11

A

As the firm is earning zero economic profits, this means that firm is breaking even i.e. Total revenue = Total cost.

In the long run competitive market there is no incentive to entry or exit, thus MR=MC=P=AC, thus leading to eroding of supernormal profits and thus bringing zero economic profits.