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Sagot :
The statements true in the long run for a company operating with negative economic profit and positive accounting profit is the firm will most likely exit the market.
When does an accounting profit become a negative economic profit?
If the economic cost is high and the accounting profit is low, the economic profit will be negative. Lower economic costs can lead to positive book profits. If the negative economic profit is offset by equal accounting, the profit, book profit will be zero.
What if the economic profit is negative?
If the economic profit is negative, the firm has an incentive to exit the market because its resources are more profitable elsewhere. The amount of economic profit a company generates depends largely on the degree of competition in the market and the period under consideration.
Learn more about economic profit:
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