Why Must Profits Be Zero in Long-Run Competitive Equilibrium

question 154

Multiple Choice

Why must profits be zero in long-run competitive equilibrium?

• A)If profits are not zero, firms will enter or exit the industry.
• B)If profits are not zero, firms will produce higher-quality goods.
• C)If profits are not zero, marginal revenue will rise.
• D)If profits are not zero, marginal cost will rise.

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Definitions:

The 3 Fs

A colloquial term referring to the primary sources of startup investment: "Friends, Family, and Fools."

Formal Funding

Financial investments obtained through official channels, such as banks, investment firms, or public offerings, to support business operations.

Angel Investors

Affluent individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity.

Crowdfunding

Gathering small sums of money from many people to finance a project or endeavor, commonly done online.