If Nicole's Knick-Knacks is a perfectly competitive firm and is making zero economic profits:
A) firms will enter the market.
B) firms will exit the market.
C) Nicole's Knick-Knacks will stay in the market.
D) the market supply curve will shift to the left.
E) the market supply curve will shift to the right.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, zero economic profit means that firms are covering all their costs, including opportunity costs, so there is no incentive to enter or exit the market. Nicole's Knick-Knacks will stay in the market.

If Nicole's Knick-Knacks Is a Perfectly Competitive Firm and Is