In perfectly competitive markets, firms in the market in the long-run, will earn zero economic profits.
<h3>What economic profits are earned in a perfectly competitive market?</h3>
In the short-run, there is a chance to earn a positive economic profit in a perfectly competitive market but this would then attract other companies into the market to make profits as well.
This then leads to the profits disappearing thanks to increased supply and lower prices. Companies would then leave and enter to either take advantage of profits or stop losses thereby keeping economic profits at zero in the long run.
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What is this for and what’s your question
The probability that the sample mean would differ from the population mean by less than 655 miles in a sample of 79 tires if the manager is correct is = 0.9805.
<h3>
What is the calculation for the above?</h3>
P (
< 655) ≡ P [ |( - μ)/√(σ²/n) | <655/√(6,220,036/ 79)]
= P (| Z | < 3.55)
= P - 3.55 < Z < 3.55) Using the z -score table
= 0.9998 - 0.0193
= 0.9805
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