Tommy's Tires operates in a perfectly competitive market.If tires sell for $50 each and ATC = $40 per tire at the profit-maximizing output level,then in the long run

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In a perfectly competitive market, if firms are earning economic profits, more firms will enter the market in the long run until the profit is driven to zero. This increased supply will shift the market supply curve to the right, lowering the equilibrium price per tire. As a result, all firms in the industry will earn zero economic profit in the long run.

Tommy's Tires Operates in a Perfectly Competitive Market