Firms usually engage in a lot of activates for profit. Zero economic profit may continue to earn profit by reducing costs.
- A monopolistic competitor, like some organizations often earn profits in the short run. The entry of some firms into the same market can bring about a shift in the demand curve faced by a monopolistically competitive firm.
When economic profit is zero, an organization is known to be earning the same as when its resources were used in the next best alternative.
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Is zero economic profit inevitable in the long run for monopolistically competitive firms? In the long run, monopolistically competitive firms
A. will not continue to earn profit because the cost of production will rise as new firms enter the market.
B. may continue to earn profit by convincing consumers their products are different.
C. will continue to earn profit due to barriers to new firms entering the market.
D. may continue to earn profit by instead beginning to produce a product identical to competitors.
E. will not continue to earn profit because monopolistically competitive firms produce identical products.
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Economists measure the personal satisfaction derived from consuming goods and services with the concept of UTILITY. Utility refers to the total satisfaction derived from consuming a good or service. The utility of a good or service has direct influence on demand and therefore price of that product.
Answer:
a. True
Explanation:
The process by which management plans, evaluates, and controls investments in fixed assets is called capital investment analysis. This process is also known as capital budgeting.
Generally, capital investment analysis or capital budgeting is used by business firms or governmental agencies to assess and measure the profitability of a long-term investment on a fixed asset such as real estate, machinery or factory equipments etc.
Hence, the management is able to choose the best option for investment after an assessment of which investment would yield a higher level of profits.
Answer:
1. Particulars Super premium Premium Economy
Material cost $16 $12 $10
Indirect cost (40000/10000) <u>$4 </u> <u>$4 </u> <u>$4</u>
Total cost $20 $16 $14
Profit (100% of total cost) <u>$20 </u> <u>$16 </u> <u>$14</u>
Selling price <u>$40</u> <u>$32 </u> <u>$28</u>
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2. Yes, the price calculated in part A takes into account what customers are willing to pay. This can be said because the company has the policy of adding 100% to the total cost. This means that the company knows that customers will be willing to pay that much amount.