Explain Why Economic Profits in All Perfectly Competitive Markets Will

question 19

Essay

Explain why economic profits in all perfectly competitive markets will tend toward zero in the long run.

---

Definitions:

Assets

Resources owned by a business that are expected to provide future economic benefits.

Owner's Equity

Owner's equity represents the residual interest in the assets of an entity after deducting liabilities, essentially the net worth of a company.

Withdrawal

The act of taking money out of an account, or the removal of funds from a partnership by a partner for personal use.

Revenues

The full extent of revenue garnered from the commercial activities that are at the core of a company’s operational agenda, particularly through goods or services.