At zero economic profits, a competitive firm: is making a normal profit; its revenues are just sufficient to cover all costs of production, including opportunity costs. has an incentive to leave the industry to make higher profit elsewhere. is unable to pay its opportunity costs of production but will remain in business to minimize losses. will benefit, in the form of higher profits, by raising its prices above average cost.

At zero economic profits, a competitive firm: is making a normal profit; its revenues are just sufficient to cover all costs of production, including opportunity costs. has an incentive to leave the industry to make higher profit elsewhere. is unable to pay its opportunity costs of production but will remain in business to minimize losses. will benefit, in the form of higher profits, by raising its prices above average cost.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 3MC

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Similar questions

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