Explain the factors that drive profits to zero in perfectly competitive markets in the long run. b. A firm will choose to operate at a loss in the short run for a certain reason. Explain this reason. c) When do firms decide to shut down production in the short run. Explain this

Explain the factors that drive profits to zero in perfectly competitive markets in the long run. b. A firm will choose to operate at a loss in the short run for a certain reason. Explain this reason. c) When do firms decide to shut down production in the short run. Explain this

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section9.3: Perfect Competition In The Long Run

Problem 3ST

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Question

a) Explain the factors that drive profits to zero in perfectly competitive markets in the long run.

b. A firm will choose to operate at a loss in the short run for a certain reason. Explain this reason.

c) When do firms decide to shut down production in the short run. Explain this.

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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