Question

classify the statements based on whether each describes a perfectly (purely) competitive firm earning an economic profit, a firm at zero economic profits, or a firm operating at a loss. you are currently in a sorting module. turn off browse mode or quick nav, tab to items, space or enter to pick up, tab to move, space or enter to drop. economic profit zero econ

Answer 1

The statements based on whether each describes a perfectly (purely) competitive firm.

Economic profit:

P > ATC

New firms incentivized to enter the market

Zero economic profit:

P=ATC

At long run equilibrium

Economic loss:

P < ATC

Firms incentivize to leave the market

Competitive firm - A superbly aggressive company is referred to as a rate taker due to the fact the strain of competing companies forces them to simply accept the prevailing equilibrium charge within the marketplace. If a company in a perfectly competitive market increases the fee of its product by using so much as a penny, it's going to lose all of its income to competition.

A aggressive company is a company in a market in which:

(1) there are many consumers and lots of sellers in the market;

(2) the products provided by way of the numerous sellers are largely the equal; and

(3) normally corporations can freely input or exit the marketplace.

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