In the Long Run, Firms Enter an Industry When

question 96

Multiple Choice

In the long run, firms enter an industry when

• A)firms in the industry realize positive economic profits.
• B)firms in the industry realize economic losses.
• C)other firms exit the industry.
• D)economic profits in the industry are zero.
• E)firms in the industry become price-makers.

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Definitions:

Binding Price Ceiling

A legal maximum price for a good or service that is set below the equilibrium price, resulting in shortages.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to market stability.

Surplus

An excess of supply over demand in a market, typically resulting in lower prices.

Price Ceiling

A legally established maximum price that can be charged for a good or service.