If price remains above the average total cost for firms in a competitive industry:
A)existing firms will exit that industry.
B)new firms will enter that industry.
C)the number of firms in the industry will neither increase nor decrease.
D)the existing firms will be making zero economic profit.

Question

Quizplus · Accepted Answer

When price remains above the average total cost for firms in a competitive industry, it indicates that firms are making an economic profit. This profit attracts new firms into the industry, seeking to earn similar returns.

If Price Remains Above the Average Total Cost for Firms