Suppose that firms in a competitive industry are earning positive economic profits. All else equal, in the long run, we would expect the number of firms in the industry to
A)increase.
B)decrease.
C)remain the same.
D)We do not have enough information with which to answer this question.

Question

Quizplus · Accepted Answer

In a competitive industry, positive economic profits attract new firms to enter the market, increasing the number of firms in the long run until profits are driven to zero.

Suppose That Firms in a Competitive Industry Are Earning Positive