If a perfectly competitive firm is producing the short- run profit- maximizing quantity and is earning positive economic profits, the firm should anticipate______ .

Question

Quizplus · Accepted Answer

In a perfectly competitive market, positive economic profits attract new firms to enter, increasing market supply and reducing the market price until economic profits are zero. Therefore, the firm should anticipate new firms to enter the market in the long run, leading to a decrease in their profits.

If a Perfectly Competitive Firm Is Producing the Short- Run