A decrease in production costs for firms in a perfectly competitive market will cause a(n):

Question

Quizplus · Accepted Answer

A decrease in production costs for firms in a perfectly competitive market will lead to economic profits in the short run because firms can sell their products at the same market price while incurring lower costs. This situation attracts new firms into the market, eventually leading to a new equilibrium where economic profits are eliminated, but this process takes time.

A Decrease in Production Costs for Firms in a Perfectly