Economic profit=Accounting profit- Normal profit
When economic profit has to be positive then Accounting profit has to be greater than 5%
Thus Tod must make profit greater than 5%
The return on government bonds is 5%. Tod owns a firm in a perfectly competitive industry...
Consider the following statements. I. In the long run, every firm in a perfectly competitive industry will make an economic profit of zero. II. In the short run, every firm in a perfectly competitive industry will make the same economic profit. III. In the long run, firms in perfectly competitive industries must be productively efficient. I and II are true; III is false. I and III are true; II is false. I and III are false; II is true. All...
1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC ا أ ا 1 2 3 4 5 6 7 8 Quantity Suppose the current price is $6. What will happen in the long run? O Nothing will happen in the long run. The firm is earning zero economic profit. O Since the firm is earning a positive economic profit, there is an incentive for new firms to enter the industry in the long...
Consider a small firm in a perfectly competitive industry. The firm is worth $600,000 and the return on investment elsewhere in the economy is 5.25 percent. Suppose the firm’s revenue in a year is $1.2 million and its operating expenses are $768,000. a. What is the firm’s accounting and economic profits in this case? b. Explain what would happen in this market in the long-run. What conditions are necessary for this to happen?
6.[10 points) Answer the following questions. a. In a perfectly competitive industry, the industry demand and supply curves are given by QD = 2,500-50P and Qs = 20P-300. Given the market conditions, graph the competitive firm's demand and marginal revenue curves. b. Graph a competitive firm that is earning economic profit. In your graph, indicate the level of profit by shading in the appropriate area. c. A perfectly competitive firm is selling 2,000 units at a price of $3, with...
4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)
4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)
4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)
4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)
4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)
If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then A) the new firms must incur an economic loss. B) the existing firms' economic profit decreases. C) consumer surplus decreases. D) there must be external benefits to consumption of the good. E) Both answers A and B are correct.