Above-normal profits are eliminated by ______, and below-normal profits are eliminated by ______.
A) entry; entry
B) exit; exit
C) entry; exit
D) exit; entry

Question

Quizplus · Accepted Answer

Above-normal profits attract new firms to enter the market, increasing competition and driving profits down. Below-normal profits cause firms to exit the market, reducing competition and allowing profits to rise.

Above-Normal Profits Are Eliminated by ______, and Below-Normal Profits Are