Figure 10-6

-Firms will continue to enter a perfectly competitive industry until

Question

Figure 10-6
​ 
-Firms will continue to enter a perfectly competitive industry until

Quizplus · Accepted Answer

In a perfectly competitive industry, firms will continue to enter until any excess returns or profits have been competed away. This is because in a perfectly competitive market, any profits earned by a firm will attract new entrants, which will increase the supply of the good or service, ultimately driving down prices and eliminating any excess profits. Therefore, only when there are no excess profits left to be earned will firms stop entering.

Figure 10-6 ​

Figure 10-6