Question

Profits encourage entry into purely competitive industries and losses encourage exit from purely competitive industries because

A) when losses are negative, firms cannot cover explicit costs.
B) when losses occur, firms need to raise the prices of their products.
C) when profits are zero, the firm is earning sufficient revenue to cover its opportunity cost.
D) when profits are positive, the firm is earning sufficient r

Answer 1

C) When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.

Step-by-step explanation:

When benefits are zero, the firm is gaining adequate income to cater for the open door expense. Misfortunes bring about exit and discharge assets to stream to business sectors where there are benefits. Minimal income and negligible expenses are equivalent; some other yield levels will bring about decreased interest.

Since quite a while ago running a focused balance, a firm is winning zero financial benefits as they won't keep on delivering because it could procure a superior return in another industry. Keep on creating because such interest relates to negative bookkeeping benefits.