Long-run economic profit does not exist for fixed factors like land because
A) bidding drives up the price of the factor until no economic profit exists.
B) there is no market for such factors.
C) these factors have L-shaped isoquants.
D) these factors will earn economic profits.

Question

Quizplus · Accepted Answer

In the long run, competition and bidding for fixed factors like land increase their prices to the point where any potential economic profit is eliminated. This is because as firms compete for these scarce resources, they are willing to pay more, driving up the cost until it equals the additional revenue generated by using the factor, leaving no room for economic profit.

Long-Run Economic Profit Does Not Exist for Fixed Factors Like