Lilly is the price-taking owner of an apple orchard.The price of apples is high enough that Lilly is earning positive economic profits.In the long run,Lilly should expect _____ apple prices due to the _____ firms.

Question

Quizplus · Accepted Answer

In the long run, if Lilly is currently earning positive economic profits, more firms will be attracted to the market causing the supply of apples to increase. This increase in supply will lead to a decrease in the equilibrium price of apples, resulting in lower apple prices. Therefore, Lilly should expect lower apple prices due to the entry of new firms.

Lilly Is the Price-Taking Owner of an Apple Orchard