What is meant by zero economic profit? If a firm earns zero economic profit in long run does it violate the profit maximizing behaviour of a firm in long run as if there is no profit then there is no point of production?

What is meant by zero economic profit? If a firm earns zero economic profit in long run does it violate the profit maximizing behaviour of a firm in long run as if there is no profit then there is no point of production?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section22.2: Perfect Competition In The Short Run

Problem 3ST

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Concept explainers

Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?

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19.What is meant by zero economic profit? If a firm earns zero economic profit in long run does it violate the profit maximizing behaviour of a firm in long run as if there is no profit then there is no point of production?

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