If economic profits in a particular industry increase, then we would expect:
A) Resources to be diverted away from that industry
B) Firms in that industry to produce less output
C) Firms to enter that industry thus expanding it
D) Consumers to buy less from that industry

Question

Quizplus · Accepted Answer

Economic profits in an industry indicate that there is high demand for the goods or services provided by the industry and that the industry is relatively inefficient in producing those goods or services. This means that firms in other industries are likely to see the opportunity for profits and enter the industry, thus expanding it.

If Economic Profits in a Particular Industry Increase, Then We