Author Question: If firms in a competitive industry are earning positive economic profits, in the long run we expect (Read 122 times)

shivanipalawai@gmail.com · **on:** Oct 12, 2022

If firms in a competitive industry are earning positive economic profits, in the long run we expect
◦ there would be no change in the industry as long as P = MC for the individual firms.
◦ the supply curve for the product will shift to the right as new firms enter the industry, causing industry output to increase and price to fall.
◦ the demand curve for the product will shift to the left, so that the price of the product will fall.
◦ the individual firms will lower their price to discourage new firms from entering the industry.
◦ the government would intervene and force the firms to lower prices.

sakura282000 · **Reply #1 on:** Oct 12, 2022

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