--%>

Describe why do firms enter an industry

Why do firms enter an industry while they know that in long run economic profit will be zero?

Firms enter an industry while they expect to earn economic profit.  These short-run profits are adequate to encourage entry.  Zero economic profits in the long run imply normal returns to the factors of production, by including the labour and capital of the owners of firms.  For instance, the owner of small business might experience positive accounting profits before the foregone wages from running the business are subtracted from these profits.  If the revenue minus other costs is just equivalent to what could be earned elsewhere, then the owner is indifferent to staying in business or exiting.

   Related Questions in Biology

  • Q : Consumer surplus-for both company

    Consumers are frequently bewildered by the distinct array of choices, plans and prices which are offered by companies offering cell phone service. Describe in terms of consumer surplus why it makes sense from both the company's perspective and that of the

  • Q : Etiological agent of cutaneous

    Write down the etiological agent of the cutaneous leishmaniasis? How disease transmitted and what are its typical manifestations?

  • Q : Life cycle of the hookworms Write down

    Write down the life cycle of the hookworms?

  • Q : Type of tissue from which cartilages

    Name the type of tissue from which cartilages and bones are made up? Answer: Cartilages and Bones, tissues with great quantity of intercellular material, are made up

  • Q : State Foreign Government Affairs

    Foreign Government Affairs: "Foreign Policy Analysis" states foreign affairs as "the actions of a government which include its foreign policy and its relations with other countries, diplomacy, international demonstration and the academic study of such

  • Q : Trends in Organization Behavior The

    The social and technological changes, knowledge explosion, product and service obsolescence and globalization have immense effects on organizations. Vase on a systematic analysis of past and current events, the following 'megatrends' are predicted, which appear relevant to the study of Organizati

  • Q : Define Customer Service Customer

    Customer Service: This can refer to the practice of giving people with a positive, useful experience before, after or during buying something. This also can consider as a department inside a company which focuses on these processes. Idyllically, every

  • Q : Self-fulfilling prophecy Describe how

    Describe how the self-fulfilling prophecy works and how it might impact or inter-relate to one’s performance or result overall.

  • Q : Arthropod classes State how excretory

    State how excretory systems of three main arthropod classes are constituted?

  • Q : Merits of indirect immuno fluorescence

    What are the merits of indirect immuno fluorescence?