Posted by Teri on Monday, June 29, 2009 at 1:36pm.
Remember, economic profits are not the same as accounting profits. Economic profits account for the opportunity cost of engaging in the business.
If a business is earning economic profits, then somebody else will see there are profits to be made. So, more people will enter into the business line, increasing supply and driving down price. A lower price means lower economic profits for everybody. People will continue to enter until economic profits are driven to zero.
Thank You.
Related Questions
Economics - If the market price falls below $4.50, the firm will earn A. ...
economics - Do Perfectly Competitive Firms earn normal profits?
Economics - A long-run supply curve is flatter than a short-run supply curve ...
economics - perfectly competitive industry. Each firm having identical cost ...
economics - Will firms in a price-taker market be able to earn profits in the ...
Economics - Isn't a monopolistic competitor most likely to earn zero ...
Economics - It is assumed that the toothpaste market is perfectly competitive ...
Economic - How is income distribution affected in monopolies? The market for ...
economics - A perfectly competitive painted necktie industry has a large number...
economics - The graph on the left shows the short-run marginal cost curve for a ...
For Further Reading
