In an industry with free entry and exit, positive economic profit:
A)indicates a market failure.
B)can never occur.
C)cannot be sustained indefinitely.
D)can be sustained indefinitely.

Question

Quizplus · Accepted Answer

Economic profit leads to entry, causing market supply to increase and equilibrium price to fall. As equilibrium price falls, the economic profit of firms in the industry falls. Entry continues until the economic profit of the firms in the industry is equal to zero.

In an Industry with Free Entry and Exit, Positive Economic