Assume the market for ball bearings is purely competitive. Currently, each of the firms in this market is earning positive economic profits. In the long run, as adjustments occur in the industry, we can expect the market price of ball bearings to

Question

Quizplus · Accepted Answer

In the long run, new firms will likely enter the market to take advantage of the positive economic profits, increasing the supply of ball bearings and driving down the market price. This decrease in market price will lead to individual firms' profits decreasing as well, as they will now have to sell their ball bearings at a lower price. Therefore, the correct choice is D.

Assume the Market for Ball Bearings Is Purely Competitive