If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product, the firm will be able to earn economic profits in the long run.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, any economic profits from a lower-cost production method will attract new firms, increasing supply and driving prices down until only normal profits are possible in the long run.

If a Firm in a Perfectly Competitive Industry Introduces a Lower-Cost