In the Long Run in a Perfectly Competitive Industry

question 179

Multiple Choice

In the long run in a perfectly competitive industry

• A) opportunity costs are negligible.
• B) economic profits will be zero.
• C) some firms will be experiencing economic losses.
• D) only entrepreneurs will earn more than their opportunity costs.

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Definitions:

Contribution Margin

The contribution margin is the revenue from a product or service minus the variable cost, indicating how much contributes to covering fixed costs and generating profit.

Net Income

A company's overall income following the subtraction of all costs, taxes, and expenses from its gross revenue.

Unit Sales Price

The amount charged to customers for a single unit of a product or service.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums.