Figure 8.7.2
-Refer to Figure 8.7.2 above. In long run equilibrium, how much is the economic profit of the firm expected to be?
A) $3.64 million
B) $3 million
C) zero
D) somewhere between $3 and $3.64 million

Question

Figure 8.7.2
-Refer to Figure 8.7.2 above. In long run equilibrium, how much is the economic profit of the firm expected to be?
A) $3.64 million 
B) $3 million 
C) zero 
D) somewhere between $3 and $3.64 million

Quizplus · Accepted Answer

In long run equilibrium, economic profit should be zero as new firms will enter the market, leading to an increase in supply and a decrease in price until the firms are earning only normal profits. Therefore, the only feasible answer is C, zero economic profit.

Figure 8.7.2 -Refer to Figure 8.7.2 Above. in Long Run Equilibrium, How