If price is above the long-run competitive equilibrium level,

Name: If price is above the long-run competitive equilibrium level,
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Question

Quizplus · Accepted Answer

When the price is above the long-run competitive equilibrium level, there is an incentive for new firms to enter the market. This increase in competition will eventually drive the price down towards the equilibrium level. If firms were to shut down or continue incurring losses, this would not be sustainable in the long run.

If Price Is Above the Long-Run Competitive Equilibrium Level