Suppose firms in a perfectly competitive industry are making economic profits. As a result I. new firms enter the industry.
II) the market price falls.
III) the economic profits of the existing firms decrease.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, economic profits attract new firms, increasing supply and causing the market price to fall, which reduces the economic profits of existing firms.

Suppose Firms in a Perfectly Competitive Industry Are Making Economic