Define long run economic profit will be zero, Financial Management

Assignment Help:

Why do firms enter an industry when they know that in the long run economic profit will be zero?

Firms enter an industry while they suppose to earn economic profit.  These short-run profits are sufficient to encourage entry.  Zero economic profits in the long run involve normal returns to the factors of production, as well as the labor and capital of the owners of firms. For instance, the owner of a small business might experience positive accounting profits before the foregone wages from running the business are subtracted from these profits.  If the revenue minus another costs is just equivalent to what could be earned elsewhere after that the owner is indifferent to staying in business or exiting.


Related Discussions:- Define long run economic profit will be zero

State about the quick ratio - position ratios, State about the Quick ratio ...

State about the Quick ratio or acid test Quick ratio = Current assets less inventories /Current liabilities(times) This  ratio  measures  immediate  solvency  of  a  busin

Measure a project’s risk as the change in the cv, Define why we measure a p...

Define why we measure a project’s risk as the change in the CV. We calculate a project’s risk as the change in the coefficient of variation since this focuses on the change in

Assignmment, what is logical process modelling? what is physical modelling?...

what is logical process modelling? what is physical modelling?

Working Capital Management, The management of Nelson plc wish to estimate t...

The management of Nelson plc wish to estimate their firm’s equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

Capital structure definition, CAPITAL STRUCTURE DEFINITION According to...

CAPITAL STRUCTURE DEFINITION According to Gerstenberg, Capital structure refers to 'the makeup of a firm's capitalisation'.  In other way, it signifies the mix of different sou

Reinvestment income, Other than zero coupon bonds, all fixed in...

Other than zero coupon bonds, all fixed income securities make periodic payments in the form of coupon interest. This coupon interest can be rei

"a" round financing, "A" Round Financing "A" Round Financing is the fir...

"A" Round Financing "A" Round Financing is the first main round of business financing through private equity investors or venture capitalists. In private equity investing, an "

Advantages and disadvantages of foreign direct investment, What are the dis...

What are the disadvantages and advantages of Foreign direct investment (FDI) like opposed to a licensing agreement with a foreign partner? Answer:  The major advantage of FDI (

Analysis of financial statement, complete the balance sheet and sales infor...

complete the balance sheet and sales information using the following data: debt to assets ratio 50% current ratio 1.8x total assets turnover 1.5x day sales outstanding 36.5 days (c

What is the maximum additional short-term funding, B.J. Industries has a cu...

B.J. Industries has a current ratio of 2.5, with $2.5 million in current assets.  Due to sales growth, the company wants to expand accounts receivable and inventories by

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd