Question

if there were 20 firms in this market, the short-run equilibrium price of ruthenium would be $ per pound. at that price, firms in this industry would . therefore, in the long run, firms would the ruthenium market. because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ per pound. from the graph, you can see that this means there will be firms operating in the ruthenium industry in long-run equilibrium. true or false: assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. true false

Answer 1

In the long run of a perfectly competitive market, firms reach an equilibrium where economic profits are driven down to zero. However, each firm may still earn negative accounting profit if implicit costs are positive.

Step-by-step explanation:

In the long run of a perfectly competitive market, firms will react to profits by increasing production and to losses by reducing production or exiting the market. This process will continue until the market reaches long-run equilibrium, where no new firms want to enter the market and existing firms do not want to leave.

At this equilibrium, economic profits are driven down to zero. However, it is important to note that zero economic profit is not equivalent to zero accounting profit. Each firm operating in the industry in the long run may still earn negative accounting profit if implicit costs are positive.