When firms earn above normal rates of return
A) they are able to raise their prices to increase their profits.
B) they are earning positive profits and new firms are likely to enter the industry.
C) they tend to leave the industry and seek profits elsewhere.
D) they are still breaking even economically.

Question

Quizplus · Accepted Answer

When firms earn above normal rates of return, it indicates they are earning positive profits, which typically attracts new firms to enter the industry, seeking to capitalize on the profitable conditions.

When Firms Earn Above Normal Rates of Return