Submit your responses to the following prompts.
- Using the definition and characteristics of perfectly competitive industries, explain whyâ€”in the long runâ€”firms earn zero economic profits. Does this mean that competitive firms earn zero accounting profits? Your response should be at least 75â€“150 words (1â€“2 paragraphs) in length.
- Joeâ€™s Widget Factory operates in a perfectly competitive industry. Joeâ€™s fixed and variable costs are given in the table below. He is a price taker and can sell as many widgets as he produces for $10 each. Complete the table using the provided link and respond to the following questions. Besides referring to your table to support your answers, include references from the course materials on profit-maximizing rules for competitive firms. Your response should be at least 75â€“150 words (1â€“2 paragraphs) in length, including table.
- What is the profit maximizing (or loss minimizing) level of output in the short run?
- What is the profit maximizing level of output in the long run?
- What are the shut-down prices in the short run and long run?
- What is the firmâ€™s supply curve?