If typical firms in a competitive industry are earning economic profits,the industry

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If firms are earning economic profits, it suggests that there is an opportunity for new firms to enter the market and also earn profits. This increases competition and reduces profits until firms are earning only normal profits. In the long run, this leads to an equilibrium where firms are operating efficiently and resources are allocated optimally. Therefore, the entry of new firms is expected in a competitive industry with economic profits.

If Typical Firms in a Competitive Industry Are Earning Economic