Suppose that the tomato industry is perfectly competitive. In the short run, tomato firms are earning economic profits. What will happen in the long run?

Question

Suppose that the tomato industry is perfectly competitive.  In the short run, tomato firms are earning economic profits.  What will happen in the long run?

Accepted Answer

More firms will enter the market, thereby increasing the industry supply and lowering the market price

Answer

More firms will enter the market, thereby decreasing the industry supply and raising the market price

Answer

The existence of profits will lead to a decrease in the demand for tomatos

Answer

The costs of the firms will increase, eventually eliminating the profit

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Suppose that the tomato industry is perfectly competitive. In the short run, to...

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