Entrepreneurs in purely competitive industries
A) have no incentive to innovate because in the long run they will earn no economic profits.
B) innovate to lower operating costs and generate short-run economic profits.
C) utilize pricing strategies to generate short-run economic profits.
D) rarely try to innovate because of a lack of financial resources.

Question

Quizplus · Accepted Answer

Entrepreneurs in purely competitive industries are not able to earn long-run economic profits due to the presence of numerous competitors. However, they still have an incentive to innovate in order to lower their operating costs and generate short-run economic profits. By innovating, they can produce goods or services at lower costs than their competitors and may be able to sell their output at a slightly lower price or reinvest some of the profits into further innovation to maintain a competitive edge.

Entrepreneurs in Purely Competitive Industries