Question

Which of the following statements are TRUE? A firm's entry/exit decision is about: I. whether profits are positive or negative now. II. whether the stream of future profits is positive or negative. III. government regulations.

Answer 1

Answer: Whether profits are positive or negative now

II. Whether the stream of future profits is positive or negative

Explanation:

It should be noted that In a perfectly competitive industry in the long​ run, there'll be new firms that will enter the market when the already existing firms are making profit.

In the case of a loss, there'll be an exit. Therefore, the true is that a firm's entry or exit decision is about whether profits are positive or negative now and also whether the stream of future profits is positive or negative.

Therefore, the correct option is and II