Free entry implies that
A) a perfectly competitive firm can never earn a profit.
B) if firms in an industry are making excessively high profits, new firms are likely to enter the industry.
C) the government regulates the number of firms that are allowed in an industry.
D) firms will always earn a profit, as new firms can enter the industry at any time they like.

Question

Quizplus · Accepted Answer

Free entry allows new firms to enter an industry if existing firms are earning high profits, leading to increased competition and potentially reducing those profits over time.

Free Entry Implies That