A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases, we can expect

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, if demand for the product decreases, the market price will decrease, causing firms to earn lower profits or even losses. This will lead some firms to exit the market in the long run until the remaining firms achieve normal profits at the new lower price level. Therefore, we can expect firms to exit the market.

A Perfectly Competitive Industry Is in Long-Run Equilibrium