Principles of Microeconomics / Unit 7 MIC 0623 short lesson, about 20 seconds
Entry and Exit
Captions available
The idea
In the long run, economic profit draws new firms into an industry and economic loss drives firms out. Free entry and exit is what makes the long run different from the short.
In practice
A profitable trade fills with newcomers; a losing one empties.
Where people slip
Economic profit, not accounting profit, is the signal. A firm earning only a normal profit attracts nobody.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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