Question
Typical modeling of competitive firms with the same cost structure indicate that the firms are not making any profits. Why would a firm's owner be
Typical modeling of competitive firms with the same cost structure indicate that the firms are not making any profits. Why would a firm's owner be willing to operate in this way?
A. Firm costs are assumed to include a minimum return above actual costs called normal profits.
B. Every company is guaranteed to make a minimum profit in order to stay in business so we can disregard the question of viability because of this guarantee.
C. Profits among different firms in the same industry are assumed to follow a bell shaped or 'normal' distribution so they average out to cover costs for all firms.
D. Most small business owners aren't very good at accounting and don't realize that they aren't making any money until it is too late.
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