In a perfectly competitive industry over the long run:
A)economic profits tend to persist.
B)the number of firms in an industry grows.
C)economic losses tend to persist.
D)economic profits and losses are driven towards zero by entry and exit.

Question

Quizplus · Accepted Answer

The incentive to earn profit and avoid loss causes firms to enter profitable markets and exit unprofitable ones until the market settles in to a zero-profit equilibrium.

In a Perfectly Competitive Industry Over the Long Run