The characteristic of entry and exit ensures that firms?

A. earn excess profit
B. earn normal profit
C. break-even
D. expand their operations

Correct Answer:

Option D – expand their operations

Explanation

Free entry and exit are economic terms used to describe the condition of a free market economic

Free entry is a condition in which sellers can freely enter the market with its product to make sales. Free exit occurs when a firm can leave the market without limit when economic losses are being incurred. Firms tend to expand in their operations as they grow, the concept of free entry and exit avails them the opportunity of entering and leaving a market at will.