Assume the market for ball bearings is purely competitive.Currently,each of the firms in this market is making a positive level of economic profits.In the long run,we can expect the market:

Question

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In a purely competitive market, firms enter the industry in the long run if they are making profits above the average rate of return. As more firms enter, the supply in the market increases, causing the price to decrease until firms are only earning a normal rate of return. Therefore, we can expect the supply to increase in the long run as new firms enter the market to compete for profits.

Assume the Market for Ball Bearings Is Purely Competitive