The entry of new firms in a perfectly competitive industry will push price below the level of average total cost.

Name: The entry of new firms in a perfectly competitive industry will push price below the level of average total cost.
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Question

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In a perfectly competitive market, the entry of new firms increases supply, which may lower prices, but prices will not fall below average total cost in the long run, as firms will exit the market if they cannot cover their costs.

The Entry of New Firms in a Perfectly Competitive Industry