![]() We shall see in this section that the model of perfect competition predicts that, at a long-run equilibrium, production takes place at the lowest possible cost per unit and that all economic profits and losses are eliminated.Įconomic Versus Accounting Concepts of Profit and LossĮconomic profit equals total revenue minus total cost, where cost is measured in the economic sense as opportunity cost. New firms can enter any market existing firms can leave their markets. ![]() In the long run, a firm is free to adjust all of its inputs. ![]()
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