If a competitive industry is neither expanding nor contracting, we would expect
A)total revenue to be zero.
B)economic profits to be zero.
C)total opportunity cost to be zero.
D)more resources to flow to that industry.

Question

Quizplus · Accepted Answer

In a competitive industry that is neither expanding nor contracting, economic profits tend to be zero because any potential profits attract new firms, increasing supply and driving prices down until profits are eliminated. This equilibrium state means firms cover their costs, including normal profit (opportunity cost of capital), but do not earn additional economic profits.

If a Competitive Industry Is Neither Expanding nor Contracting, We