Normal profit
Normal profit signifies zero economic profit. Explain why?
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Answer: Assume that the existing firms are earning over normal profits. Attracted by the positive gains, the new firms enter in industry. The market supply rises and the price comes down. New firms carry on entering and the price persists to fall till economic profits are decreased to zero.
In condition of losses, firms begin leaving the industry, supply downs and prices begins going up and all this carry on till losses are wiped out. Remaining firms in industry then once again earn only normal profits or zero profit.
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Along this demonstrated in below demand curve for DVD games, demand is more elastic at a price of: (w) $10. (x) $6. (y) $1. (z) zero. Discover Q & A Leading Solution Library Avail More Than 1411751 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1950894 Asked 3,689 Active Tutors 1411751 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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