marginal firm operates at a point where the price of the products is equal to AC of production .This firm earns zero profits, why does it still stay in business????
THZ A LOT
- 1 十年前最愛解答
To answer this question, we need to know the difference
between "Accounting Profit" and "Economic Profit".
Accounting Profit = Accounting Income - Accounting Cost
Economic Profit = Accounting Income - Accounting Cost - Implicit Cost(or Opportunity Cost).
The firm in our question earns zero "Economic Profit" after considering opportunity cost. However, it still earns positive "Accounting Profit". Therefore it still stays in business.
- 1 十年前
既然導致infra-marginal firm earn rent的原因是有superior factors,那為何marginal firms不去爭取他? 最終導致superior factors的market price上升,infra-marginal firm的成本上升,直至不再有superior factors能帶來rent為止 ...