Positive economic profits exist for a firm in the long run if price is above

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Positive economic profits occur only when price is above long-run average cost, as this includes both the variable and fixed costs of production. In the long run, a firm is able to adjust its inputs and technology to minimize its costs, and if they are able to sell their product at a price higher than the cost of producing it, then they will earn economic profits. Prices above long-run marginal cost and long-run variable cost may allow for short-term profits, but not sustainable economic profits in the long run. Long-run total cost includes all costs, both fixed and variable, so if price were above this amount, there would be no profit.

Positive Economic Profits Exist for a Firm in the Long