Suppose firms in a perfectly competitive market are earning an economic profit. As new firms enter, the price ________ and the economic profit of each existing firm ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the entry of new firms increases the supply of the product, leading to a decrease in the market price. As the price falls, the economic profit of each existing firm decreases.

Suppose Firms in a Perfectly Competitive Market Are Earning an Economic