<p>Theoretically it is possible but only if the non profit organization operates at a cost which is lower than all other existing as well as expected new players as in a free market anybody with a much lower cost can enter and offer a price lower than the NPO and still earns a profit. And what about other NPOs in the same field. If they have a lower cost they will certainly offer a lower price. Secondly the NPO should accepted by the consumers. Practically speaking the market has many more complexities such as existence of brands and the information that price suggests. A lower price means lower quality which may not be accepted by the consumers. For example I may start manufacturing and selling mobile handsets at zero profit but still I might not drive Apple out of the market. Also, the world is not much perfect. To start I would have to install a capacity that can produce at a cost lower than the existing players and then offer a lower price to drive them out.</p>

<p>But still you can have examples of apparent monopolies in markets say for example 'online information'. What do you think Wikimedia is ? It is an NPO.</p>

CC BY-SA 3.0
2015-11-28T17:57:24.267Z
2015-11-28T17:57:24.267Z
Sub-Optimal
<p>Account and economic profits are two different things because while one takes into account the explicit costs and other <a href="https://askanydifference.com/difference-between-accounting-and-economic-profit/" rel="nofollow noreferrer">accounts for implicit as well as explicit costs</a>.</p>

CC BY-SA 4.0
2020-03-11T06:31:17.070Z
2020-03-11T06:31:17.070Z
Sandeep
<p>In microeconomics textbook, there is always this notion of zero economic profit in perfect competition. We know that when people gets negative economic profit, they often leave the market. What I wonder is if there exists some NPOs that competes in everyday markets (such as food markets because it sounds like doable), earning say zero accounting profit, meaning negative economic profit. If there do exist, why aren't they driving other for profit competitiors out? Is this because not much people are investing or what?</p>

CC BY-SA 3.0
2015-11-28T14:51:15.037Z
What do you exactly mean by NPO in food market. Any example ?
Sub-Optimal
CC BY-SA 3.0
2015-11-28T16:07:07.613Z
In a competitive market there are no barriers to entry and firms have very little if any power over price, so how might they drive another firm out?
DornerA
CC BY-SA 3.0
2015-11-28T17:01:42.793Z
I can only imagine someone operating at negative economic profit in the short run unless they expected much higher returns in the future. Could you elaborate on what you mean when you say you feel food markets competing at NPO sounds "doable"?
Kitsune Cavalry
CC BY-SA 3.0
2015-11-28T17:22:03.533Z
I believe, @Kun means NPO = Non-Profit (not for profit) organisation.... but they are not considered as agents in undergrad level micro books
london
CC BY-SA 3.0
2015-11-28T18:49:31.587Z
I would challenge your premise by guessing that YMCA (non-profit I believe) gyms do drive out other low-end gyms.
Pburg
<microeconomics>
Zero Economic Profit and opportunity cost?
Kun
# Zero Economic Profit and opportunity cost?

(Asked by: username_0 on 2015-11-28)

In microeconomics textbook, there is always this notion of zero economic profit in perfect competition. We know that when people gets negative economic profit, they often leave the market. What I wonder is if there exists some NPOs that competes in everyday markets (such as food markets because it sounds like doable), earning say zero accounting profit, meaning negative economic profit. If there do exist, why aren't they driving other for profit competitiors out? Is this because not much people are investing or what?

**Tags:** microeconomics

> **Comments:**
> **username_1**: What do you exactly mean by NPO in food market. Any example ?  
> **username_2**: In a competitive market there are no barriers to entry and firms have very little if any power over price, so how might they drive another firm out?  
> **username_3**: I can only imagine someone operating at negative economic profit in the short run unless they expected much higher returns in the future. Could you elaborate on what you mean when you say you feel food markets competing at NPO sounds "doable"?  
> **username_4**: I believe, @username_0 means NPO = Non-Profit (not for profit) organisation.... but they are not considered as agents in undergrad level micro books  
> **username_5**: I would challenge your premise by guessing that YMCA (non-profit I believe) gyms do drive out other low-end gyms.  

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## 2 answers

### Answer by username_1 on 2015-11-28. Score: 1 | Accepted answer

Theoretically it is possible but only if the non profit organization operates at a cost which is lower than all other existing as well as expected new players as in a free market anybody with a much lower cost can enter and offer a price lower than the NPO and still earns a profit. And what about other NPOs in the same field. If they have a lower cost they will certainly offer a lower price. Secondly the NPO should accepted by the consumers. Practically speaking the market has many more complexities such as existence of brands and the information that price suggests. A lower price means lower quality which may not be accepted by the consumers. For example I may start manufacturing and selling mobile handsets at zero profit but still I might not drive Apple out of the market. Also, the world is not much perfect. To start I would have to install a capacity that can produce at a cost lower than the existing players and then offer a lower price to drive them out.

But still you can have examples of apparent monopolies in markets say for example 'online information'. What do you think Wikimedia is ? It is an NPO.


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### Answer by username_6 on 2020-03-11. Score: 0

Account and economic profits are two different things because while one takes into account the explicit costs and other [accounts for implicit as well as explicit costs](https://askanydifference.com/difference-between-accounting-and-economic-profit/).


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