We would expect an industry to expand if firms in that industry are
A)earning normal profits.
B)earning economic profits.
C)breaking even.
D)earning accounting profits.

Question

Quizplus · Accepted Answer

An industry is likely to expand if firms within it are earning economic profits. Economic profits occur when total revenues exceed total costs, including both explicit and implicit costs. This signals to other firms that there is an opportunity for profit in this industry, attracting new entrants.

We Would Expect an Industry to Expand If Firms in That