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In the Long Run, a Perfectly Competitive Firm Makes Zero

question 349

Essay

In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?


Definitions:

Response Variable

The variable in a study or experiment that is assumed to depend on or be affected by changes in another variable (often called the independent variable).

Explanatory Variable

A variable in a statistical model that is believed to cause or explain changes in the response variable.

SST

Total sum of squares; a term used in statistics to describe the total variance in a dataset.

Total Sum Of Squares

A statistical measure representing the total variance in a dataset that is used to calculate the standard deviation and variance.

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