When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.

Name: When firms in a purely competitive industry are earning profits that are greater than normal, the supply of the product will tend to decrease in the long run.
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Question

Quizplus · Accepted Answer

In a purely competitive industry, when firms are earning profits greater than normal, this attracts new firms into the industry, increasing the supply of the product in the long run.

When Firms in a Purely Competitive Industry Are Earning Profits