Explain in detail why economic profits are zero in the long run in the Perfect Competition (PC) Model. As part of your explanation talk about what happens when profits are not zero.
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Explain in detail why economic profits are zero in the long run in the
1. Explain the difference between economic profits and accounting profits.
2. Use the MR, MC, and
3. Accompany your graphs with a story of a fictitious business.
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- Explain in detail why economic profits are zero in the long run in the Perfect Competition (PC) Model. As part of your explanation talk about what happens when profits are not zero. a) Explain the difference between economic profits and accounting profits. b) Use the MR, MC, and ATC curves along with supply and demand to show how profits will go to zero in the long run. Graph profits, losses, and a point where profit equals zero (Don’t forget get what MR is in perfect competition) c)Accompany your graphs with a story of a fictitious business. d) Thought Question – What would happen the PC model if one seller figured out a new cheaper production method? (There may be more than one correct answer to this question) Please answer bExplain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.Please answer all 4. Financial value of the firm increases when the firm generates economic returns, in the context of its desired social engagement, in excess of its __________. Group of answer choices a. Fixed costs b. Cost of capital c. Variable costs d. Opportunity costs 5. David was having a heated argument with Sue that the business should consider more than shareholders when making it business decisions. David was reflecting Group of answer choices a. Profit maximization b. Stakeholder theory c. The learning curve d. Microeconomics equilibrium 6. In the short run, a firm’s decision to shut down should not take into consideration Group of answer choices a. Fixed costs b. Marginal costs c. Variable costs d. Avoidable costs 7. According to the “Shared Value” article by Porter and Kramer, which of the following is NOT a key principle in developing a shared value approach within a firm? Group of answer choices a. Enabling local cluster…
- Why is it important for managers to understand the mechanics of supply and demand both in the short run and the long run? Give examples of companies whose business was either helped or hurt by changes in supply or demand in the market in which they are competing.Explain the two concepts listed below and draw a diagram to show a long-run supply curve associated with each. What are the possible causes, respectively? a. Increasing-cost industry b. Decreasing-cost industryWhat are the assumptions of perfect competition? What are the prospects for profitability in the short-run and long-run under perfect competition?
- Why is the perfect competition often used as a benchmark? Question 3 options: The perfect competition model is more frequently observed in the real world compared to other market models It provides a useful comparison to markets that operate in more complex, real-world conditions. It accounts for a variety of issues like pollution, inventions of new technology, poverty, and government programs that other models do not account for. In the real world, all markets are perfectly competitive, so this model allows us to compare them to one another.Many large corporations, such as General Motors and Apple, operate in markets that are not even close to perfectly competitive. But unlike the products these companies sell, shares of these firms’ common stock are bought and sold in what could be described as a perfectly competitive market. Based on the three conditions that make a market perfectly competitive, what characteristics of the purchase and sale of shares of stock of a large company like GM or Apple, are consistent with perfect competition?Family Mart like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this? It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss. What are the different type of costs incurred in the short run and in the long run?
- you read in a business magazine that the computer firms are reaping high profits. with the theory of perfect competition in mind what do you expect to happen over time? Complete the following sentences to describe the long run adjustment.What are some characteristics of perfect competition? Is the Banana market a perfect competition? When you are buying bananas, what is your decision making process? Do you have any favorite brand of banana? How can companies in the market compete? Please name some other examples of perfect competition?Consider the concepts of accounting profit and economic profit. Suppose you are a consultant and you are meeting with a business owner who is trying to decide whether to keep that business open or open a business in a different industry. Discuss the differences between accounting profit and economic profit and why it should matters in this circumstance.