Question

Suppose that some firms in a competitive industry are earning zero economic profits, while others are experiencing losses. All else equal, in the long run, we would expect the number of firms in the industry to

A. increase.

B. decrease.

C. remain the same.

D. We do not have enough information with which to answer this question.

Answer 1

What would you expect? A business can not operate long at no gain, or continuous losses.

Sra