When profit-maximizing firms in a competitive market are earning profits,what must be happening in the market

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When profit-maximizing firms in a competitive market are earning profits, it signals to potential new firms that there is room to enter the market and make profits as well. As more firms enter the market, supply increases, which puts downward pressure on prices and reduces profits for individual firms. This process continues until profits are driven to zero in the long run equilibrium, which occurs when the market demand and supply are equal at the market price. Therefore, the presence of profits in a competitive market indicates that new firms are likely to enter, increasing competition and reducing profits in the long run.

When Profit-Maximizing Firms in a Competitive Market Are Earning Profits,what