Should I Enter or Exit?START! Are the existing firms making a profit? NO! YES! Is the price of the good < the averageIs the price of total cost?the good > the NO!average totalcost? YES! YES! Therefore there is aTherefore negativethere is a profit?positive profit? YES! YES!ENTER THE EXIT THEMARKET!!! MARKET!!!
Should I Stay in the Market?START! Is your firm making zero economic profit? YES! NO!You should So the price ofexit your firm yourif you’re good=Averagemaking a loss! Total Cost? YES! New firms will not enter the market. REMAIN IN THE MARKET!!! Remaining firms will not exit the market.
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