Question

In the hat market, suppose a typical firm is currently earning an economic profit greater than zero and the market is competitive. As the market moves to its long run equilibrium, we expect the market’s short run _____ curve will _______, and economic profits ______________.

Answer 1

Answer:

... short-run supply curve will shift to the right.

.... economic profits will reduce

Answer 2

Answer:

- move to the right

- reduce

Explanation:

This is because more firms would enter the market thereby making it more competitive, causing a drop in price of goods and resulting in less profit.