If, over the long run, an increase in the number of sellers in a purely competitive market causes a decrease in price, you would expect that, before the decrease in price, sellers in the market were:
A) losing money.
B) just breaking even.
C) earning excess profits.
D) just earning enough to cover their normal profits.

Question

Quizplus · Accepted Answer

An increase in the number of sellers in a purely competitive market typically indicates that the market was previously profitable, attracting new entrants. This competition drives prices down, suggesting sellers were earning excess profits before the price decrease.

If, Over the Long Run, an Increase in the Number