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

Define condition for fixed-for-floating interest rate swap, What is the ess...

What is the essential condition for a fixed-for-floating interest rate swap to be possible? For a fixed-for-floating interest rate swap to be feasible it is essential for a quali

Cash flow statement, Given below are the cash flows of a project. Find out ...

Given below are the cash flows of a project. Find out the net present value of the project. Cost of capital is 18% and initial investment is Rs. 2,00,000. Year Cash Flows (lakhs)

Calculate actual returns using the dividend discount model, You've just won...

You've just won a huge $100 million lottery.  You've decided to invest your winnings in the following way:  $30 million in real estate,  $30 million in  corporate bonds and $40 mil

Distinguish between diversifiable and non-diversifiable risk, Question: ...

Question: (a) An efficient financial market is assumed to hold under the Capital Asset Pricing Model (CAPM). What is the main hypothesis of an efficient financial market? (

Calculate tax gain or loss, High Tech Production Inc. purchased a comp...

High Tech Production Inc. purchased a computerized measuring device two years ago for $80,000. This equipment falls into the five-year category for MACRS depreciatio

Tax-backed debt obligations, Tax-backed debt obligations are the debt...

Tax-backed debt obligations are the debt instruments issued by counties, states, cities, towns, special districts and school districts. These are secured by some

State the factors of small organisations, State the factors of Small organi...

State the factors of Small organisations - More creative and dynamic - More flexible to adapt to environmental changes - More informal and small for example some people l

Explain about deferred payment, Q. Explain about Deferred Payment? supp...

Q. Explain about Deferred Payment? suppose a person take a loan of a specified amount at a given rate of the interest. he wants to repay this loan together with the interest in

Define in market mergers, What are "in-market" mergers? A: An in-market m...

What are "in-market" mergers? A: An in-market merger is one that occurs between two banks operating in similar geographic area, usually a city or metropolitan area. The merged in

Government bonds, Government securities are the most important and un...

Government securities are the most important and unique financial instruments in the financial markets of any economy. Government of India Securities (GOI Sec) in

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