Suppose all firms in a perfectly competitive industry are earning an economic profit. One would expect that, over time, the number of firms in the industry will ________ and the market price will ________.
A)rise; fall
B)fall; rise
C)rise; rise
D)rise; stay the same

Question

Quizplus · Accepted Answer

Entry of new firms in response to profit incentives will shift the market supply curve to the right, causing the price to fall.

Suppose All Firms in a Perfectly Competitive Industry Are Earning