Assume the surfboard manufacturing industry is perfectly competitive. If some firms in the industry are earning supernormal profits, firms will____________ the industry and the market price will ____________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if firms are earning supernormal profits, new firms will enter the industry, increasing supply and causing the market price to fall until firms earn normal profits.

Assume the Surfboard Manufacturing Industry Is Perfectly Competitive