If Firms in a Perfectly Competitive Industry Are Earning an Economic

question 75

Essay

If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry,then
A) consumer surplus decreases.
B) the existing firms' economic profit decreases.
C) there must be external benefits to consumption of the good.
D) the new firms must incur an economic loss.
E) Both answers A and B are correct.

• A) consumer surplus decreases.
• B) the existing firms' economic profit decreases.
• C) there must be external benefits to consumption of the good.
• D) the new firms must incur an economic loss.
• E) Both answers A and B are correct.

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Definitions:

ABS Braking

Anti-lock Braking System, a safety feature in vehicles that prevents the wheels from locking up during braking, ensuring better control.

ABS Brakes

Anti-lock Braking System, a safety anti-skid braking system that prevents the wheels from locking up and skidding during braking, ensuring the driver maintains steering control.

ABS Braking

A safety feature in vehicles that prevents the wheels from locking up during braking, ensuring better control.

ABS Failure Codes

Diagnostic trouble codes specific to the Anti-lock Braking System, indicating various types of failures or malfunctions.