Answer to Question #97902 in Microeconomics for Pooja Goswami

Question

d. If Spruce​ Decor's economic profits were typical of furniture makers in​ 2019, what would you expect to happen in this​ industry? Explain.
A.
Exit would occur because economic profits are positive.
B.
Exit would occur because economic profit is less than accounting profit.
C.
Exit would occur because economic costs exceed accounting costs.
D.
Entry would occur because economic profits are positive.

Answer 1

D. Entry would occur because economic profits are positive. If Spruce Décor makes profit then it will attract other firms into the industry and therefore entry occurs.