In the long run,new firms enter a perfectly competitive market when
A) normal profit is greater than zero.
B) economic profit is equal to zero.
C) normal profit is equal to zero.
D) economic profit is greater than zero.
E) the existing firms are weak because they are incurring economic losses.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, new firms are attracted to enter when they observe existing firms earning economic profits greater than zero. This indicates the potential for profit beyond the normal return on investment, making entry appealing.

In the Long Run,new Firms Enter a Perfectly Competitive Market