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Unformatted text preview: Profits are normal because each resource within the firm is earning a return that is neither greater or less than its next best employment possibility (its opportunity cost) Not the same as accounting profit Long run equilibrium Key conclusion: perfect competition is said to be efficient because in the long-run equilibrium: o Economic profits tend toward zero o The total costs (ATC) to produce each unit of a good and service is at a minimum (at the lowest possible point on the ATC curve)...
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- Spring '07