The U.S.coal industry has endured several years of economic losses as natural gas has replaced coal in electricity generation and other uses.At the same time,the solar panel industry in the United States has recorded large positive economic profits.If these markets are perfectly competitive,we would expect ________.
A) neither entry nor exit from the U.S. coal industry but entry into the solar panel industry
B) exit from the U.S. coal industry but no entry into the solar panel industry
C) exit from the U.S. coal industry and entry into the solar panel industry
D) entry into both the U.S. coal industry and the solar panel industry

Question

Quizplus · Accepted Answer

If the markets are perfectly competitive, we would expect firms to exit the U.S. coal industry due to the economic losses and enter the solar panel industry due to the large positive economic profits. Therefore, the best choice is C- exit from the U.S. coal industry and entry into the solar panel industry.

The UScoal Industry Has Endured Several Years of Economic Losses as as Natural