If firms are making profits under perfect competition,in the long run the industry supply will ______ and price will _____.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if firms are making profits, new firms will be attracted to the market, increasing the industry supply. As supply increases, the price will fall due to the law of supply and demand, leading to a decrease in profits until they are normalized across the industry.

If Firms Are Making Profits Under Perfect Competition,in the Long