For an entire perfectly competitive industry, which of the following statements is incorrect in the long run?
A)Economic profit for the industry equals zero.
B)Producer surplus equals economic rent.
C)Economic profit equals total revenues minus total costs.
D)Producer surplus for the industry equals economic profit for the industry.

Question

Quizplus · Accepted Answer

In the long run, economic profit for a perfectly competitive industry will equal zero due to the entry and exit of firms in response to market conditions. Producer surplus and economic rent are not the same thing; economic rent is the surplus profit earned by a factor of production above and beyond what it could earn in its next best alternative use, while producer surplus is the difference between the price received by a producer and the minimum price at which they would be willing to sell the product. Economic profit equals total revenues minus total costs and producer surplus does not necessarily equal economic profit.

For an Entire Perfectly Competitive Industry, Which of the Following