Figure 16-4
-Refer to Figure 16-4. Which of the following will occur in the long run in this industry?
A)Firms will exit this industry.
B)Firms will enter this industry.
C)This firm will continue to earn positive economic profits.
D)This firm will incur losses.

Question

Figure 16-4 
-Refer to Figure 16-4. Which of the following will occur in the long run in this industry?
A)Firms will exit this industry. 
B)Firms will enter this industry. 
C)This firm will continue to earn positive economic profits. 
D)This firm will incur losses.

Quizplus · Accepted Answer

In the long run, if firms in an industry are earning positive economic profits, new firms will be attracted to enter the industry, increasing supply and driving down prices until economic profits are zero.

Figure 16-4 -Refer to Figure 16-4. Which of the Following Will Occur