Question:

Economics.. ?

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Is there another term used for zero economic profit?

Like equilibrium or break-even? Are they even related? Thanks heaps guys :) xx

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3 ANSWERS


  1. Break-even is not zero economic profit.

    When you have zero economic profit that means you're only covering normal profit.

    In pure competition, when you have zero economic profit, you're in long-run equilibrium.

    Break-even is where the firm shuts down.


  2. break-even is correct

    Equilibrium is completely wrong. An equil requires buyers and sellers and conditions zero profit is only a firm related term

  3. It's also called normal profit, and it is the equilibrium in perfect competition and monopolistic competition.  

    Break even is more of an accounting profit term, which is different because economic profit takes into consideration the opportunity cost of capital etc, while accounting profit does not.
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