The assumption of easy entry and exit implies that, in the _____ run, all firms in the industry will earn _____ economic profits.
A)long; zero
B)short; positive
C)short; zero
D)long; positive

Question

Quizplus · Accepted Answer

The assumption of easy entry and exit implies that firms can easily enter or exit the industry depending on economic profits. In the short run, some firms may earn positive economic profits due to various factors, but in the long run, new firms will enter the industry, increasing competition and reducing economic profits to zero for all firms. Therefore, in the long run, all firms in the industry will earn zero economic profits.

The Assumption of Easy Entry and Exit Implies That, in the _____