In a perfectly competitive market, if a resource that one firm utilizes is superior to resources used by other firms, and, as a result, lowers unit costs for the firm, that firm is likely to earn __________ in the short run. In time, however, the firm's __________ curve will rise to reflect the superior-quality of the resource it employs and the firm will then earn __________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm with a superior resource that lowers unit costs can earn positive economic profit in the short run. Over time, as the market adjusts to this advantage (through mechanisms like increased demand for the resource, raising its cost, or imitation by competitors), the firm's average total cost (ATC) curve will adjust upwards, leading to the firm earning normal profit in the long run.

In a Perfectly Competitive Market, If a Resource That One