Explain in detail why economic profits are zero in the long run in the Perfect Competition (PC) Model. As part of your explanation talk about what happens when profits are not zero.

1. Explain the difference between economic profits and accounting profits.

2. Use the MR, MC, and ATC curves along with supply and demand to show how profits will go to zero in the long run. Graph profits, losses, and a point where profit equals zero (Don't forget get what MR is in perfect competition)

3. Accompany your graphs with a story of a fictitious business.

4. Thought Question - What would happen the PC model if one seller figured out a new cheaper production method? (There may be more than one correct answer to this question)