When profit-maximizing firms in competitive markets are earning profits,
A)market demand must exceed market supply at the market equilibrium price.
B)market supply must exceed market demand at the market equilibrium price.
C)new firms will enter the market.
D)the most inefficient firms will be encouraged to leave the market.

Question

Quizplus · Accepted Answer

When profit-maximizing firms in competitive markets are earning profits, it attracts new firms to enter the market, seeking to also earn profits. This is because the presence of profits signals that the market can support more suppliers.

When Profit-Maximizing Firms in Competitive Markets Are Earning Profits