If there is an increase in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning positive profits will see its profits
A) increase.
B) not change.
C) decrease.
D) impossible to determine

Question

Quizplus · Accepted Answer

When there is an increase in industry supply while demand remains constant, the market price will decrease. In a perfectly competitive market, individual firms are price takers, so a lower market price reduces the price at which firms can sell their product, leading to a decrease in profits if they were previously earning positive profits.

If There Is an Increase in Industry Supply While the Industry