There is a tendency for economic profit in all competitive industries to go to zero.

Question

Quizplus · Accepted Answer

Economic profit is the difference between total revenue and total opportunity costs, including both explicit costs (such as wages, rent, and materials) and implicit costs (such as the opportunity cost of the owner's time and capital). In the long run, entry and exit of firms can occur, and if there are no barriers to entry, firms will continue to enter until the economic profit is zero. This is because, in a competitive market, new firms can easily replicate the products of existing firms, and as supply increases, prices will fall until the economic profit of all firms is zero.

There Is a Tendency for Economic Profit in All Competitive