Asked by Denise White on Jul 21, 2024
Verified
Assume firms break even in an industry. New firms ________ attracted to the industry and current ones ________ exiting it.
A) are not; are not
B) are not; are
C) are; are not
D) are; are
Exiting
The process of leaving or withdrawing from a situation, market, or competition, often used in the context of firms leaving an industry.
Break Even
Break even is a point at which total costs and total revenues are exactly equal, meaning there is no net loss or gain, and the business or project is just covering its expenses.
- Understand the role of market entry and exit decisions in profit maximization.
Verified Answer
PB
Payton BatchelderJul 26, 2024
Final Answer :
A
Explanation :
When firms break even, they are covering their costs but not making extra profit, so new firms are not attracted to the industry due to lack of profit incentive, and current firms are not motivated to exit since they are covering their costs.
Learning Objectives
- Understand the role of market entry and exit decisions in profit maximization.