We can predict that resources will move into an industry whenever
A)economic profits for firms in that industry are greater than zero.
B)economic losses for firms in that industry are minimized.
C)economic profits for firms in that industry are zero.
D)accounting profits for firms in that industry are zero.
E)accounting profits for firms in that industry are greater than zero.

Question

Quizplus · Accepted Answer

Firms will move resources into an industry when they can make economic profits, which are profits above and beyond the opportunity cost of the resources used. If economic profits in an industry are greater than zero, it indicates that resources are earning more in that industry than in their next best alternative, and therefore, firms will move resources into that industry to take advantage of the profit opportunities.

We Can Predict That Resources Will Move into an Industry