In a competitive market where firms are earning economic profits,which of the following is likely as the industry moves toward long-run equilibrium?

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Quizplus · Accepted Answer

In the long run, new firms are likely to enter the industry due to the economic profits being earned. This increased competition will result in a higher supply and lower price, as well as more firms, until economic profits are eroded and the industry reaches a long-run equilibrium. Therefore, the likely outcome is a lower price and more firms.

In a Competitive Market Where Firms Are Earning Economic Profits,which