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Discussion Topic 5

Discussion Topic 5

Q Competitive firms stay in business if they make zero economic profit. Would you stay in business if you were making zero economic profit? Discuss.

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I will stay in Business if they are zero profit. It is not always easy for companies to enter or exit a market in the short term. So in the short run we can assume that there is a fixed number of firms in the market. In the long run, the number of firms adjusts as market conditions change. The zero profit takes into account the labor cost and the consumption of mechanical. This is how much you spend on workers, how much you earn as management, the cost of maintenance on machinery, the cost of renting the house, etc.