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2 years ago

the graph to the right depicts the per unit cost curves and demand curve facing a shirt manufacturer in a competitive industry

1 answer:

4 0

Firms will continue to join this market until the industry as a whole begins to make a typical economic profit. To encourage new enterprises to enter the market, short-term profits motivate them to do so. In the long run, businesses will produce a normal or even negative economic profit.

<h3>What is a competitive industry?</h3>

Companies may join and depart the market easily in a competitive sector since there are minimal barriers to entry.

Generally, the equation for Profit per unit is mathematically given as

P= Price - ATC

Therefore

P= $7.49 - $6.63

P= $0.86

In conclusion, Profits in the short term encourage new businesses to join the market. Firms will make a typical or even negative economic profit in the long term.

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The preparation of the trial balance is presented in the spreadsheet. Kindly find the attachment below:

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