When do new firms tend to enter a competitive industry?

Question

Quizplus · Accepted Answer

New firms tend to enter a competitive industry when they can earn positive profits. If existing firms in the industry are earning high profits, it creates an incentive for new firms to enter the industry and compete for a share of those profits. On the other hand, if existing firms are earning low or zero profits, it may not be worth it for new firms to enter. Additionally, new firms may be deterred from entering an industry with high fixed costs, as it can be difficult to compete with established firms that have already amortized those costs.

When Do New Firms Tend to Enter a Competitive Industry