The number of firms increases in the long run when the industry realizes profits.

Name: The number of firms increases in the long run when the industry realizes profits.
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Question

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When firms in an industry are realizing profits, it signals to other potential firms that there is an opportunity to enter the market and make profits. This leads to an increase in the number of firms in the long run, as new firms enter the industry to capitalize on the profits.

The Number of Firms Increases in the Long Run When