alleryStart learning →The source defines 'entry' as which process?
AFirms entering an industry because of industry profits
BFirms leaving an industry because of industry losses
COne firm hiring its very first employee
DOne firm raising its price above market rate
Answer & Solution
Correct answer: A. Firms entering an industry because of industry profits
1. The source's key term for entry ties it directly to industry profits, not losses.
2. Profits act as a signal that draws new firms into the industry and encourages existing firms to expand.
3. Leaving an industry in response to losses is exit, the opposite process.
4. Hiring one employee or changing price are firm-level actions, not the industry-wide process the source calls entry.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.3 | Entry and Exit Decisions in the Long Run_
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