The first firm in an industry

Question

Quizplus · Accepted Answer

The first firm in an industry may make an economic profit, as there may be a high demand for the product or service and no competitors yet. However, it is also possible that the first firm may incur losses as it faces uncertainty and high initial costs of setting up the business. The choice of whether to stay in business or shutdown will depend on factors such as the level of losses incurred, the entrepreneur’s willingness to bear risk, and the long-term prospects of the industry.

The First Firm in an Industry