Suppose that some firms in a perfectly competitive industry are earning positive economic profits.In the long run,the:

Question

Quizplus · Accepted Answer

If some firms in a perfectly competitive industry are earning positive economic profits, it means that there is excess demand for the product in the market. This attracts new firms to enter the industry, increasing the supply and eventually driving down the price. As the price decreases, the profits of the existing firms also decrease and eventually, in the long run, they will earn normal profits. Thus, new firms will enter the industry until all firms are earning only normal profits, and the number of firms in the industry increases. Therefore, the correct answer is D.

Suppose That Some Firms in a Perfectly Competitive Industry Are