Assume the market for ball bearings is purely competitive. Currently, each of the firms in this market is earning positive economic profits. In the long run, as adjustments occur in the industry, we can expect the market price of ball bearings to

Question

Quizplus · Accepted Answer

In a purely competitive market, positive economic profits attract new firms, increasing supply and driving down the price. As the price decreases, individual firms' profits also decrease until they reach normal profit levels, where total revenue equals total cost, including opportunity costs.

Assume the Market for Ball Bearings Is Purely Competitive