Purchase Solution

COMPETITIVE FIRMS

Not what you're looking for?

Ask Custom Question

Explain why there are no economic profits for perfectly competitive firms in the long run.

PLEASE DO NOT USE CITATIONS FROM WIKIPEDIA, ENCARTA, OR WORLD BOOK

Purchase this Solution
Solution Summary

The expert explains why there are no economic profits for perfectly competitive firms in the long run.

Solution Preview

First, we will define what economic profit means.

Economic profit is the earning (aka accounting profit) - your opportunity cost (in most cases your time). For example, if you decided not to go to college, you can work at a local bar and earn 20k/year. An accountant will tell your that your earning is 20k (which is your accounting profit), but an economist would ask, what is your best alternative to working in a bar. ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • A monopolistically competitive market

    However, competitive firms use marginal cost pricing, while monopolistically competitive firms charge prices in excess of their marginal costs.

  • Qualitative and Quantitative Marketing Strategies

    So, this qualitative strategy helps the firms to develop priceless quality products by which firms could be able to fight with large competitors. This marketing strategy could be also useful to gain competitive advantage from competitive market.

  • Perfectly competitive firms

    186029 Economic profit Why do perfectly competitive firms make zero economic profit in the long run?

  • Economics

    Firms also improve their efficiency by providing some changes in their products and making them different from other competitive products. This helps in increasing competitive advantage in the market.

  • Business Entry

    Such firms from underdeveloped countries can often establish a niche for themselves by capitalizing on the unique competitive advantage offered by their parent nations and then translating such competitive advantage into competitive products and services

  • Profits in competitive firms

    This will attract new firms. Profits in a competitive industry are a signal for the entry of new capital. The expert examines profits in competitive firms. A short-run situation in which quantity demanded equals quantities are determined.

  • Market Structure: Perfect Competition

    All perfectly competitive firms have access to the same production techniques.

  • Perfectly competitive firms

    The expert examines perfectly competitive firms.

  • pricing, product design, and advertising

    PRICE Because of this we say firms operating in a perfectly competitive market are price takers. This is because there are so many firms that if a few firms enter or exit the market it essentially has no effect on market supply.

  • Competitive Analysis

    Are these three firms participating in a monopolistically competitive market? What characteristics of the good make the market monopolistically competitive? Explain.

View More Related Solutions