Explore BrainMass
Share

Explore BrainMass

    Long-Run Profit in a Perfectly Competitive Market

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    For Profit Labs, Inc. (FPL) is a private laboratory that does only routine blood count. With total assets of $8 million last year, FPL took in $3 million in revenue and had expenses of $2 million. The average firms in other industries make a return of only 10 percent on their assets.

    The market for lab services is potentially competitive, but right now there are only a few firms in the industry. However, laboratory technicians are free to enter the industry if they wish. Firms in the industry charge around $300 for blood counts, and techs' charge about $20. What do you expect will happen in the long run?

    © BrainMass Inc. brainmass.com October 10, 2019, 4:16 am ad1c9bdddf
    https://brainmass.com/economics/competition/long-run-profit-in-a-perfectly-competitive-market-454107

    Solution Preview

    Problem: For Profit Labs, Inc. (FPL) is a private laboratory that does only routine blood count. With total assets of $8 million last year, FPL took in $3 million in revenue and had expenses of $2 million. The average firms in other industries make a return of only 10 percent ...

    Solution Summary

    This solution explains what will happen in a potentially competitive market in the long run as a result of increased competition.

    $2.19