FIGURE 8-2

-Refer to Figure 8-2. The firm is now able to sell more of its lawn care services at a higher price. As a result of this, in what timeframe will the firm be able to earn economic profits?

Question

FIGURE 8-2
 
-Refer to Figure 8-2. The firm is now able to sell more of its lawn care services at a higher price. As a result of this, in what timeframe will the firm be able to earn economic profits?

Quizplus · Accepted Answer

In the short run, a firm can earn economic profits if it can sell its product at a higher price due to increased demand or other factors. However, in the long run, other firms may enter the market if they see that economic profits are being made, increasing supply and thus driving prices down until firms are only earning normal profits again.

FIGURE 8-2 -Refer to Figure 8-2. the Firm Is Now Able to Is