Does L&P earn positive economic profit if it produces the allocatively efficient quantity? Explain.

Q: What type of economic profit can most firms expect to make in the long run? Explain your answer.

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Q: Can you explain to me why in the short run, firms only use variable cost to determine whether or not…

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Q: Do entry and exit occur in the short run, the long run, both, or neither?

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Q: What two lines determine whether a firm is making positive or negative or zero profits?

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Q: In the long-run equilibrium, what is the price? what is the output? what is the total profit?

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Q: When would a seller possibly decide to exit the industry over the long run? What should product…

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Q: Explain how a firm chooses a level of output to maximise profit

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Q: Soft drink industry has been historically profitable why? compare the economies of the concentrate…

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Q: In the long-run, a perfectly competitive firm will earn what kind of economic profit?

A: In the long run, a perfectly competitive firm will earn normal/zero economic profit.

Q: If you are a manager in a highly competitive business such where should you put your most effort to…

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Q: Explain briefly what you mean by the following terms: a. Variable cost b. Market Power

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Q: What does acceptable loss mean for a competitive firm? Explain and Draw a graph

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Q: Will a perfectly competitive market display allocative efficiency? Why or why not?

A: ANS Allocative Efficiency occurs when the total surplus is maximized. Where the total surplus is…

Q: Explain how economics make profit or loss when firms are perfectly competitive.

A: In a competitive market there are large number of firms producing similar and identical products…

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).