New firms have incentive to enter an industry when there is(are):
A) new production technologies.
B) positive economic profits.
C) an abundance of labor.
D) high capital costs.

Question

Quizplus · Accepted Answer

Positive economic profits create an incentive for new firms to enter an industry. This is because economic profits suggest that there is excess demand for the goods or services being produced, which can be met by new entrants. A and D may create opportunities for innovation and differentiation, but alone they do not necessarily guarantee entry into the industry. An abundance of labor, choice C, could be a factor in the decision to enter an industry, but it is not a determining factor on its own.

New Firms Have Incentive to Enter an Industry When There