Economic profits encourage firms to ___ the industry, and losses encourage firms to ___ the indu
exit; enter
enter; enter
enter; exit
exit; exit

Economic profits encourage firms to enter the industry, attracted by the potential for high returns, while losses incentivize firms to exit the industry to minimize their financial setbacks. This natural ebb and flow help to allocate resources efficiently, sustaining competition and innovation over time.

Interestingly, this dynamic is at the heart of many industries, from tech startups to traditional manufacturing. For instance, in booming sectors like renewable energy, the allure of profits has resulted in a surge of entrants, while sagging oil prices can push struggling firms to bow out, reshaping the economic landscape.