Which of the following statements about pure competition in the long run is not true?
A) Entry and exit of firms will push economic profits of firms in the industry toward zero.
B) Entry and exit of firms will shift the demand curve facing the representative firm in the industry.
C) The long-run adjustment in pure competition happens through shifts in the industry supply curve.
D) The long-run adjustment in pure competition happens through shifts in the industry demand curve.

Question

Quizplus · Accepted Answer

In pure competition, the long-run adjustment happens through shifts in the industry supply curve, not the industry demand curve. The demand curve facing the representative firm in the industry is perfectly elastic, so changes in demand do not affect the firm's output or price in the long run.

Which of the Following Statements About Pure Competition in the Long