Question

hen entry barriers into a market are low, firms will tend to earn zero economic profit in the long run because a. profit-seeking entrepreneurs will not enter a market when entry barriers are low. b. short-run profit attracts additional suppliers and drives down the market price. c. consumers will refuse to pay more than the cost of producing a good once they find out the producer's per-unit costs. d. low entry barriers lead to rising costs

Answer 1

Answer:

The correct answer is B

Explanation:

Economic profit is the difference among the revenue received from the sale of the output and the cost of all inputs used and opportunity cost.

Zero economic profit, it is the situation where the firm is earning the same if its resources were employed in the next alternative which is best.

When the entry barriers in the market are low, then the firm will have the tendency of having a zero economic profit in the period of long run, as the profit which is short run will attract the extra suppliers which will result in down in the market price of the product.