In a market that allows free entry and exit, the process of entry and exit ends when:

Question

Quizplus · Accepted Answer

In a market with free entry and exit, if profits are zero, there will be no incentive for new firms to enter the market, and existing firms may exit if they can't cover their costs. If some firms are making a loss, the market is not in long-run equilibrium, and firms will exit until the remaining firms are earning zero profit. The inability to obtain financing may deter entry, but it is not the only determinant of the entry and exit process in a market with free entry and exit.

In a Market That Allows Free Entry and Exit, the Process