If a firm in a perfectly competitive industry is experiencing average revenues greater than average costs,in the long-run
A)Some firms will leave the industry and price will rise
B)Some firms will enter the industry and price will rise
C)Some firms will leave the industry and price will fall
D)Some firms will enter the industry and price will fall

Question

Quizplus · Accepted Answer

In the long run, if firms are experiencing average revenues greater than average costs, it indicates economic profits. This attracts new firms to enter the industry, increasing supply and causing the price to fall until firms earn normal profits.

If a Firm in a Perfectly Competitive Industry Is Experiencing