Refer to the information provided in Figure 9.4 below to answer the question that follows. Figure 9.4
-Refer to Figure 9.4. From the diagram, existing firms in this industry make ________ economic profits, and as long as this continues, ________.
A) negative; new firms will not enter it and existing firms will leave it.
B) zero; new firms will not enter it and existing firms will not leave it either.
C) positive; new firms will enter the industry and existing firms will not leave it.
D) positive; the industry supply curve will shift to the left.

Question

Refer to the information provided in Figure 9.4 below to answer the question that follows.  Figure 9.4
-Refer to Figure 9.4. From the diagram, existing firms in this industry make ________ economic profits, and as long as this continues, ________.
A) negative; new firms will not enter it and existing firms will leave it. 
B) zero; new firms will not enter it and existing firms will not leave it either. 
C) positive; new firms will enter the industry and existing firms will not leave it. 
D) positive; the industry supply curve will shift to the left.

Quizplus · Accepted Answer

Existing firms in this industry make positive economic profits, which means they are earning more than just covering their costs. This will attract new firms to enter the industry, but existing firms will not leave as long as they are still making profits. Thus, the industry is likely to experience increased competition, but will not necessarily see a decrease in the number of existing firms.

Refer to the Information Provided in Figure 9