An increase in demand in a perfectly competitive market will cause a permanent increase in economic profit.

Name: An increase in demand in a perfectly competitive market will cause a permanent increase in economic profit.
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Question

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In a perfectly competitive market, an increase in demand may initially lead to higher prices and economic profits. However, these profits attract new firms into the market, increasing supply until prices fall back to the level of economic costs, eliminating the economic profit.

An Increase in Demand in a Perfectly Competitive Market Will