Free entry and exit means that the number of firms in the market adjusts until
A)producers continuously enter the market freely.
B)the market grows to a profitable level.
C)economic profits are driven to zero.
D)products are free.

Question

Quizplus · Accepted Answer

Free entry and exit means that new firms can enter and old firms can exit the market without any obstacles. This leads to increased competition and drives economic profits to zero in the long run. Therefore, the correct answer is C, economic profits are driven to zero.

Free Entry and Exit Means That the Number of Firms