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An economic profit

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Assume a market is currently earning economic profit.
What are some potential barriers to entry, which would prevent new competitors from entering the market and competing those profits away?
Why do perfectly competitive firms make zero economic profit in the long run?

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Solution Summary

A discussion of economic profit and long run equilibrium; barriers to entry is examined.

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An economic profit indicates that firms in this industry are making more than firms in other industries do, with the same investment. Thus, anyone thinking of going into business will be drawn to this particular market. There are several things ...

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