Question

In a market that allows free entry and exit, the process of entry and exit ends when, for the typical firm in the market, a. profit is zero. b. total revenue is equal to average total cost. c. average revenue exceeds marginal cost. d. All of the above are correct

Answer 1

Step-by-step explanation:

a. profit is zero.

In a market that allows free entry and exit, firms will continue to enter or exit until they reach a point where their economic profit (or economic loss) is zero. At this point, there is no incentive for firms to further enter or exit because they are neither making a profit nor incurring a loss. This is a key feature of a competitive market with perfect competition.