Assume that firms in a perfectly competitive market are earning economic profits.The statement which describes the change in market price and output as a result of the entry of new firms into this market is

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The entry of new firms into a perfectly competitive market will increase the number of producers in the market, which will cause the short-run market supply curve to shift to the right, resulting in a decrease in market price and an increase in total market output. This is because the new firms will increase the quantity supplied at each price point, and the increase in supply will cause the price to fall. Since firms in a perfectly competitive market earn zero economic profits in the long run, the decrease in price will eventually eliminate economic profits for all firms, resulting in a new equilibrium with a lower price and higher market output.

Assume That Firms in a Perfectly Competitive Market Are Earning