The ability of price-taker firms to freely expand or contract their businesses and to enter or exit the market means that
A) prices will always be high enough to generate positive economic profit.
B) resources that would be more valuable elsewhere will be trapped, unproductively, in a particular industry.
C) resource owners cannot move their resources to other areas where they would be more highly valued.
D) resources that would be more valuable elsewhere will not be trapped, unproductively, in a particular industry.

Question

Quizplus · Accepted Answer

Free entry and exit in a market ensures that resources can move to where they are most valued, preventing them from being trapped in less productive uses.

The Ability of Price-Taker Firms to Freely Expand or Contract