Good W is produced in a competitive industry with increasing costs of production.The figure below shows how a typical firm's long-run average cost curve shifts upward as industry output of good W expands.With 50 firms in the industry,each firm faces an identical long-run average cost curve given by LAC.With 80 firms in the industry,each firm faces an identical long-run average cost curve given by LAC'.And with 120 firms in the industry,each firm faces an identical long-run average cost curve given by LAC''. When there are 50 firms in the industry in long-run competitive equilibrium,the economic profit earned by each firm is $_________.

Question

Good W is produced in a competitive industry with increasing costs of production.The figure below shows how a typical firm's long-run average cost curve shifts upward as industry output of good W expands.With 50 firms in the industry,each firm faces an identical long-run average cost curve given by LAC.With 80 firms in the industry,each firm faces an identical long-run average cost curve given by LAC'.And with 120 firms in the industry,each firm faces an identical long-run average cost curve given by LAC''.  When there are 50 firms in the industry in long-run competitive equilibrium,the economic profit earned by each firm is $_________.

Quizplus · Accepted Answer

In long-run competitive equilibrium, each firm earns zero economic profit. This is because if a firm earns positive economic profit, new firms will enter the market attracted by the profits, driving down the price until economic profit is zero. Therefore, when there are 50 firms in the industry, the economic profit earned by each firm is zero.

Good W Is Produced in a Competitive Industry with Increasing