Question

In a perfectly competitive industry rev: 06_26_2018 Multiple Choice economic profits may exist in the long run but not in the short run. economic profits may exist in the short run but not in the long run. no economic profits can exist in either the short run or the long run. economic profits may persist in the long run if consumer demand is strong and stable.

Answer 1

Answer:

Economic profits can exist in the short run but not in the long run.

Explanation:

In a perfectly competitive market, a company or firm can derive/generate income or profit in the short-run, but in terms of the long-run, it usually have economic profits of zero. There is also a lot of sellers or firms and each firms has a small market share. All firms produce a standardized (identical) product and both consumers and each firms are price-takers.

Perfect competition is simply known as a term use to explain or discribe industriy in which a lot of firms produce identical products with little to no barriers to entering that industry.