Perfectly Competitive Firms Are Earning Economic Profits at a Market

Perfectly competitive firms are earning economic profits at a market price of $6 and an average total cost of $5. If new firms enter and increase the average total cost for all firms, the market price will ________ until ______.

A) fall; it reaches the new lower average total cost
B) increase; it reaches the new higher average total cost
C) increase; economic profits are equal to zero
D) fall; it reaches the new higher average total cost