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

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In a perfectly competitive market, firms will enter or exit the market based on the profitability of the industry. If the profit margin is high, new firms will be attracted, increasing the level of competition and driving down prices. On the other hand, if the profit margin is low, firms will exit the market, leaving only the most efficient firms to continue. In this case, Tommy's Tires is earning a profit of $10 per tire ($50 - $40), which is relatively high. Therefore, it is likely that new firms will enter the market, increasing competition and pushing down profits to a level where only the most efficient firms can survive in the long run. Thus, the best choice is A) more firms will enter the market.

Tommy's Tires Operates in a Perfectly Competitive Market