When sellers in a market earn economic profits:
A)average costs must be falling.
B)marginal revenue is above price.
C)new sellers will be attracted into the market.
D)marginal cost is above average revenue.

Question

Quizplus · Accepted Answer

When sellers in a market earn economic profits, it means that they are earning more than their opportunity costs. This attracts new sellers into the market, increasing competition and driving down profits until they reach zero. Therefore, choice C is the best answer as it reflects the natural tendency for new sellers to enter a profitable market.

When Sellers in a Market Earn Economic Profits