Which of the following statements is correct? Test Bank: I Topic: The Long-Run Adjustment Process in Pure Competition
A)Economic profits induce firms to enter an industry; losses encourage firms to leave.
B)Economic profits induce firms to leave an industry; profits encourage firms to leave.
C)Economic profits and losses have no significant impact on the growth or decline of an industry.
D)Normal profits will cause an industry to expand.

Question

Quizplus · Accepted Answer

Economic profits attract new firms to enter an industry, while losses cause firms to exit, leading to long-run equilibrium in pure competition.

Which of the Following Statements Is Correct? Test Bank: I