If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning profits will see its profits
A) increase.
B) not change.
C) decrease.
D) impossible to determine.

Question

Quizplus · Accepted Answer

When there is a decrease in industry supply while demand remains constant, the market price will increase. In a perfectly competitive market, individual firms are price takers, so an increase in market price leads to higher revenues for the same quantity sold, thereby increasing profits for firms already earning profits.

If There Is a Decrease in Industry Supply While the Industry