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Homework answers / question archive / What economic factors would affect a firm's desire to enter and exit a market? What are the market signals that would tell a firm that it is profitable to enter or exit? If possible, use a real-world example from current or recent economic events

What economic factors would affect a firm's desire to enter and exit a market? What are the market signals that would tell a firm that it is profitable to enter or exit? If possible, use a real-world example from current or recent economic events

Economics

What economic factors would affect a firm's desire to enter and exit a market? What are the market signals that would tell a firm that it is profitable to enter or exit? If possible, use a real-world example from current or recent economic events.

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Economic factors that affect a firm's desire to enter the market are the number of firms that were already in the market, the price of the product, the output of the product, market structure (monopoly, perfect competition) and government spending. If the total costs was low enough for the firm to guarantee profit the firm would enter the market. Market exit is based off of profitability. If all firms in the market are losing money it might be profitable to exit the market. An example of this is in the bidding for government contracts. The construct industry might not be profitable but when there is an increase in government spending with respect to construction many firms enter the market.

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