Perfectly competitive firms are earning economic profits at a market price of $18 and an average total cost of $15. If new firms enter and increase the average total cost for all firms, the market price will _______ until _______ .
A) increase; economic profits are equal to zero
B) increase; it reaches the new higher average total cost
C) fall; it reaches the new lower average total cost
D) fall; it reaches the new higher average total cost
Correct Answer:
Verified
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