Long-run economic profit for perfectly competitive firms | Microeconomics | Khan Academy

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A firm in a perfectly competitive market might be able to earn economic profit in the short run, but not in the long run. Learn about the process that brings a firm to normal economic profits in this video.
AP(R) Microeconomics on Khan Academy: Microeconomics is the study of individual decisionmakers in an economy, such as people, households, and firms. Learn how markets work, how incentives drive decisionmaking, and how market structure influences market outcomes. We hit the traditional topics from an AP Microeconomics course, including basic economic concepts, markets, production and costs, profit maximization perfect competition, imperfectly competitive market structures, game theory, factor markets, and income inequality.
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[@92Julesrules]

I am from Germany and there is almost no really useful video about that topic in german. But this one is so simple and so easy to understand. I am impressed and thankful for being able to understand another language. Great video, thanks.

[@Dnkpy]

Thank you Sal for educating us. Keep up the good work!

[@DanTheStripe]

Incredible video. I always knew that economic profit in a perfectly competitive market went to zero in the long run but never knew why. This explains it bang on. Thank you!

[@thinithipalayangoda3730]

so will they never make a profit, if it comes to zero all the time?

[@eliopalombi]

@@thinithipalayangoda3730 they will not make economic profits, but they obviously will make accounting profits. Economic profits include opportunity costs, like the value of the next best alternative, in this case the next highest paying job.

[@aasthasingh3711]

No matter wherever i go.... This is the only channel where i finally understand everything.

[@michelleg2901]

wow. beautiful lecture. I don't know how to thank you..

[@wrjazziel]

Thanks, really helpful!

[@Mylanyoutubechannel]

lol never understood this until this video. Thank you very Much.

[@nathaliyaminukshi8630]

thank you for clear explaination

[@Currymuncher6229]

Thank you so much. You are life saver

[@user-xp4ko2eg8q]

Bro, thanks so much, you use a six minutes video make me understand a theory that uses 7 pages ppt and 30 minutes class time from my teacher. I'm already think about should I join the following classes or just sitting in library and self study.

[@alannac.7392]

Thank you!

[@_Infocars]

Nicely explained 👍

[@user-db7qs5sp8s]

Thank you very much

[@sonamjyrwa8047]

awesome expalination

[@revivingpositive6111]

Thanks

[@aster3080]

Why did u set the equilibrium points of the new supply curves with the old demand curve. Eq points are set with a new supply and demand curve

[@lizzyberg1082]

best video!

[@princekangwa3232]

i wish you were my professor not someone i know at the university of zambia

[@victoriaschmidt677]

Love u so much

[@yasmingill9327]

2 Questions
Is the middle point ("productively efficient") meant to be the breakeven point
Is the point of the differences between the point whereby firms make lots of profit and then no profit meant to be representative of the boom and bust cycle?

[@woddle30]

Hi 💗

[@saurabhsharma9625]

At minimum ATC economic profit =0, what about Accounting profit ?....If it is different, How can firms calculate the implicit part of opportunity cost which we use calculate economic profit

[@thejammer2383]

My question too. Also, how they stay in the market if they are not making any profit economically? I am confused, if you know the answer by now, could you please let me know?

[@thejammer2383]

If they make zero economic profit, why do they stay in the market? I mean their average total cost is same as the marginal revenue. What profit do they get?

[@md.fahimshahriar725]

they get accounting profit..

[@kfurgie999]

It's not realistic. These models have to exclude certain parts of reality, and are meant to be like a "skeleton" that shows you underlying dynamics. The minimum total cost is going to have to include keeping the capitalist alive, except then, there would be more profit by that capitalist getting a job at the firm.
It is like in physics, is there a spherical cow in a frictionless vacuum? No.

[@tedmink7568]

Economic Profit is a theoretical concept. It accounts for both implicit and explicit costs. They still make an accounting profit.

[@jaykay121]

Can a monopoly ever achieve productive efficiency??

[@hobknockers111]

In reality, firms that are less competitive are unlikely to be producing at the productively efficient point as they are earning supernormal profits and have no need to cut costs. Hope that makes sense 😬

[@kumarchandresh4044]

@@hobknockers111 u are right for example monopolies usually tends to restrict output as they earn high profits even if they reduce their output

[@kumarchandresh4044]

But monopolies can also benefit from EOS and invest in R&D which could make them more efficient

[@kittson8385]

taught me more than my teacher did lmao

[@H4IF4]

i love you

[@olivezoo]

p=MR, why

[@leodecarlo5427]

I use but videos to study all the time man

[@turkishpunisher6386]

Start with "Khan english".

[@gollavillihari2516]

@@turkishpunisher6386 hahahah🤣🤣

[@enderzebak2863]

@@turkishpunisher6386 maybe you should start with khan ethics

[@turkishpunisher6386]

@@enderzebak2863 🤥

[@mdhabiburrahman734]

I didn’t believe this theory

[@eksimisruh]

can you explain why?