Entry into a competitive market will continue until

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will continue to enter until they drive economic profits down to zero. Firms will still earn normal profits, which are just enough to cover the opportunity cost of the resources used in production, but they will not earn any additional profit beyond that. Therefore, option A is the correct choice as normal profits are considered as one of the components of economic profits. Option B is incorrect since normal profits are considered in economic profits. Option C is incorrect because accounting losses are unrelated to the decision of firms to enter or exit a market.

Entry into a Competitive Market Will Continue Until