Answer to Question #76855 in Economics for SHEHZAAD

Question

5.1 Explain the difference between normal profit and economic profit. (5 marks)
5.2 Explain ANY FOUR (4) factors of production . (4 marks)
5.3 Explain with the aid of a properly labelled diagram, the marginal revenue curve facing a perfectly competitive firm.
(11 marks)

Answer 1

5.1 Normal profit is zero profit received in the long-run and economic profit is the difference between the revenue received from the sale of an output and the opportunity cost of the inputs used.
5.2 The factors of production include land, labor, capital and entrepreneurship.
5.3 The marginal revenue (MR) curve facing a perfectly competitive firm is a horizontal line, which is the same as the demand curve and market price, so MR = P = D.