Suppose that some firms in a perfectly competitive industry are earning positive economic profits. In the long run, the:

Question

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Positive economic profits will attract new firms to enter the industry in the long run, which increases the industry's supply and leads to a decrease in price. As a result, the economic profits of each firm will decrease until they reach zero. At this point, the number of firms in the industry will have increased to the point where they are all making only normal profits, and the industry is in long-run equilibrium.

Suppose That Some Firms in a Perfectly Competitive Industry Are