In the long run, firms will enter industries where price is:
A) greater than average cost.
B) equal to average cost.
C) less than average cost.
D) positive.

Question

Quizplus · Accepted Answer

Firms will enter an industry where the price is greater than the average cost because they can earn profits in the long run. If the price is equal to average cost or less than average cost, firms will not be able to cover their costs and earn profits, hence it is not a viable option for them to enter such an industry.

In the Long Run, Firms Will Enter Industries Where Price