Above-normal profits earned by existing firms in a perfectly competitive market will eventually lead to:

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Quizplus · Accepted Answer

Above-normal profits in a perfectly competitive market will incentivize entry of new firms into the market, which will eventually increase the overall supply and drive down prices, reducing profits for all firms. Eventually, in the long run, competition will force prices down to a level where only normal profits are earned, and any firms unable to earn even that level of profit will exit the market.

Above-Normal Profits Earned by Existing Firms in a Perfectly Competitive