If profits are positive in the short run in a perfectly competitive industry, which of the following would you NOT expect to happen as the market moves to the long run?

A. Each firm will decrease output.

B. Profits of each firm will fall.

C. The market demand curve will remain unchanged.

D. Total market output will fall.

E. The market price will fall.

F. Firms will enter the industry.

G. Each firm's individual demand curve will shift down.

Question

Business

Luka Reynolds

3 May, 03:02

If profits are positive in the short run in a perfectly competitive industry, which of the following would you NOT expect to happen as the market moves to the long run?

A. Each firm will decrease output.

B. Profits of each firm will fall.

C. The market demand curve will remain unchanged.

D. Total market output will fall.

E. The market price will fall.

F. Firms will enter the industry.

G. Each firm's individual demand curve will shift down.

+1

Answers (1)

Know the Answer?

Ciara Guerrero · Answer 1

G (each firm individual curve will shift down)

Explanation:

Each firm individual curve will shift downward because the total revenue for a firm in a perfectly competitive market is the product of price and quantity (TR=P*Q) in the short run, if a firm has a negative economic profit, it should continue to operate if its price exceeds its average variable cost. It should be brought down if its price is below its average variable cost.