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Unformatted text preview: han
Eventually, this fact is
taken into account, by
Cordero either paying
higher rent for the land
or incurring implicit
costs for it. This moves Cordero’s ATC curve
upward to the same level as Hancock’s,
and Cordero earns zero economic
profits. The profits have gone as
payment (implicit or explicit) for the
higher-quality, more productive land. Profit And Discrimination
• A firm’s discriminatory behavior can affect
its profits in the context of the model of
• If a firm is in a perfectly competitive market
structure, it will pay penalties if it chooses
• The greater the penalties, the less
discrimination there will be. Q&A
• If firms in a perfectly competitive market are earning
positive economic profits, what will happen?
• If firms in a perfectly competitive market want to produce
more output, is the market in long-run equilibrium?
• If a perfectly competitive market in long-run equilibrium
witnesses an increase in demand, what will happen to...
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