This moves corderos atc curve upward to the same

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Unformatted text preview: han Hancock’s land. 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 perfect competition. • If a firm is in a perfectly competitive market structure, it will pay penalties if it chooses to discriminate. • 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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