If economic profits are earned in a competitive market,then over time
A)Additional firms will enter the market.
B)The market supply curve will shift to the left.
C)Equilibrium price will rise as more firms enter.
D)Normal profit will fall to zero as more firms enter.

Question

Quizplus · Accepted Answer

If economic profits are earned in a competitive market, it indicates that the market is experiencing above-normal profits. This attracts new entrants into the market, increasing the supply of goods or services. As a result, the market supply curve shifts to the right, which eventually eliminates the economic profits. When economic profits are eliminated, firms earn only normal profit, which is the minimum amount of profit necessary to keep them in business.

If Economic Profits Are Earned in a Competitive Market,then Over