In the long run firms will ________ as long as there are more economies of scale and new firms will enter the industry as long as they earn ________.
A) expand; zero profits
B) contract; positive economic profits
C) contract; zero profits
D) expand; positive economic profits

Question

Quizplus · Accepted Answer

In the long run, firms will expand to take advantage of economies of scale, which are cost advantages that enterprises obtain due to their scale of operation. New firms will enter the industry as long as existing firms are earning positive economic profits, as these profits signal the potential for financial success in the industry.

In the Long Run Firms Will ________ as Long as There