Suppose that some firms in a perfectly competitive industry are earning positive economic profits. At this time, the:

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In a perfectly competitive industry, firms will enter until all economic profits are competed away and the industry reaches long-run equilibrium. Therefore, if some firms are earning positive economic profits, more firms will enter the industry in the long run, increasing competition and decreasing profits for all firms. The industry is not in long-run equilibrium, and D is the correct answer. Option A is incorrect because a leftward shift in the industry supply curve would result in higher market price and increased profits, making it even more attractive for firms to enter the industry. Option B is incorrect because the number of firms can only change in the long run, not the short run. Option C is also incorrect because the number of firms will increase, not decrease.

Suppose That Some Firms in a Perfectly Competitive Industry Are