The assumption in perfect competition that there is an easy entry and exit from the market implies that firms will make a zero economic profit in the long run.
<h3>Why do firms make a zero economic profit?</h3>
In a pure competition, companies are allowed to freely enter and leave.
They take advantage of this to enter a market when prices are high and economic profit is being made.
As more firms enter, the economic profit keeps decreasing as prices decrease until this profit gets to zero and then turns to economic losses.
At this point, some firms will leave the market to stop making losses. When they do, the supply will decrease which leads to prices rising once more.
The cycle will then repeat itself and keep the companies at a zero economic profit in the long run.
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Answer:
Each of the following are types of Overheads allocation methods.
Explanation:
Factory overheads such as rent, electricity or water can not be traced directly to a cost object.
When determining the cost of a cost object these overheads are apportioned to departments they pass through for processing or the actual job using an allocation method.
The common methods for allocating overheads are plant-wide rate method, departmental overhead rate method and activity-based costing method.
Answer:
true
Explanation:
i believe forgive me if wrong
Answer:
Higher prices with same sales quantity will mean greater profit.
Explanation:
Let's hold some variables constant. If a business sells books, and they take the prices up, if they sell the same quantity (at higher prices) this would increase revenues. Higher revenues, less the same cost structure (variable and fixed costs) will lead to a greater profit generation. Of course in the real world, price elasticity of demand comes in play when prices are changed. If prices go up, typically sales quantity will decrease and there may be a net effect in revenue and hence profit. In the simple case where prices go up and sales quantity is unaffected, net profit will rise.
Answer:
Technology has made our lives simpler and easy. With the help of technology we can stay connected even if we live miles away from our close ones. But on the other hand it also separates us from the real world.
There are pros and cons of everything and technology can also be said as curse and boon for our society. Excessive use of anything can be harmful. With the increasing technological advancement there is increase in crimes as well.
