Panel C Panel S D2 Industy that makos short um profts Which

Panel C Panel S, D2 Industy that makos short um profts Which of the dagrams shows the oflect on the Induliry as it tarotions to a long num equiltbrium? Rofer to the diagrams above. Consider a typical 8m in a parfectly competilive O A. Panel O B. Panel O C. Panel C O D. Panel D

Solution

Ans) B is the correct option. Panel B. In the long run, firms in perfect comptetion earns zero economic profit because there is free entry and exit of new firms. The diagram of panel B shows the supply increases and shifts rightwards whereas the demand curve remains the same.