Week 2_7 Economic Loss in Perfect Competition

Step 1:

Get to know Basic Concepts:

-- Economic profits differs from accounting profit.

-- Profit might still be made but firm expects a higher profit level; the opportunity costs are too high.

-- Firms will look for alternative markets that are more profitable.

Step 2:

Question:

If a firm producing carrots is experiencing an economic loss, it can swap to producing onions.

What is this onion market called?

Discuss with fellow students in Discussion Forum.

Step 3:

Watch the Video: