If Zero Economic Profit Is Being Earned in a Competitive

question 26

Multiple Choice

If zero economic profit is being earned in a competitive industry,

• A)firms leave the industry.
• B)firms permanently shut down.
• C)firms enter the industry.
• D)no firms enter or leave the industry.
• E)firms temporarily shut down.

---

Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being sued or suing in its own name.

Accounting Purposes

The specific reasons or objectives for maintaining financial records and conducting financial analyses, including compliance, reporting, and decision-making.

Legal Purposes

Activities or actions that are undertaken in accordance with law and designed to effectuate legal ends.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its business or to pay debt.