If Dirk's Doughnuts is a perfectly competitive firm and is currently incurring economic losses of $500:

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Quizplus · Accepted Answer

In a perfectly competitive market, firms will continue to enter as long as there are economic profits to be made, and exit if they are incurring economic losses. Therefore, if Dirk's Doughnuts is currently incurring losses, some firms will exit the market, causing the supply curve to shift to the left, and eventually re-establishing equilibrium where firms earn zero economic profit.

If Dirk's Doughnuts Is a Perfectly Competitive Firm and Is