Which of the following statements are TRUE? A firm's entry/exit decision is about:
I. whether profits are positive or negative now.
II. whether the stream of future profits is positive or negative.
III. government regulations.
A) I, II, and III
B) I only
C) I and II only
D) II and III only

Question

Quizplus · Accepted Answer

The decision to enter or exit a market is based on whether the stream of future profits is positive or negative, which is statement II. Statement I is partially true but does not capture the entire picture as the firm also considers future profits. Government regulations, as mentioned in statement III, may affect a firm's decision, but it is not always a determining factor. Therefore, C, I and II only, is the best choice.

Which of the Following Statements Are TRUE? a Firm's Entry/exit