When a firm experiences positive economic profits over the long run,

Question

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Positive economic profits suggest that the firm is earning more than its opportunity cost and may be retaining its excess profits. This can lead to inequitable distribution of wealth as the owners of the firm may be earning significant profits at the expense of other stakeholders such as workers, suppliers or consumers. Hence, equity may not be achieved. Additionally, allocative and technical efficiency are not necessarily guaranteed by positive economic profits. A firm could be using inefficient production methods and still earning profits due to market power or lack of competition, which would not result in allocative or technical efficiency. Moreover, being a natural monopoly is one way to achieve positive economic profits but not the only way.

When a Firm Experiences Positive Economic Profits Over the Long