A Firm Operating in a Perfectly Competitive Market Earns Zero

question 224

True/False

A firm operating in a perfectly competitive market earns zero economic profit in the long run but remains in business because the firm's revenues cover the business owners' opportunity costs.

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Definitions:

High Concentration Ratio

Indicates that a large percentage of a market is controlled by a few firms, which could suggest less competition.

Interindustry Competition

Competition between firms that are in different industries but may target similar markets or customer needs.

Aluminum Industry

Sector of the economy focused on the production, processing, and distribution of aluminum, a lightweight and versatile metal.

High Concentration Ratio

An economic measurement indicating that a large portion of market share is controlled by a few firms, often pointing to a lack of competition within an industry.