In the long run, perfectly competitive firms earn zero economic profit. Why do firms enter an industry when they know that in the long-run they will not earn any profit?
What will be an ideal response?
Even though in the long run firms earn zero profit, in the interim period they can earn economic profits. Breaking even in the long run means that a firm earns a return comparable to what it could earn in an alternative use of its resources.
Economics
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An increase in physical capital or a technological advance
A) raises the real wage rate. B) decreases the quantity of labor employed. C) shifts the production function downward. D) decreases demand for labor.
Economics
Which of the following does a monopoly control, that a perfectly competitive firm does not control?
a. how much to produce b. technology c. what price to charge d. what inputs to use e. plant size
Economics