In a perfectly competitive market, the process of entry and exit will end when firms in the market:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will continue to enter the market as long as economic profits are being made. This increase in supply will eventually cause the market price to decrease, resulting in lower profits for firms. Firms will continue to exit the market until economic profits reach zero, at which point no further entry or exit will occur. Therefore, the process of entry and exit will end when firms in the market are making zero economic profit.

In a Perfectly Competitive Market, the Process of Entry and Exit