greater than the return available in Industry B That means that firms in Industry B are earning less than they could in Industry A Firms in Industry B are experiencing economic losses Given easy entry and exit, some firms in Industry B will leave it and enter Industry A to earn the greater profits available there As they so, the supply curve in Industry B will shift to the left, increasing prices and profits there As former Industry B firms enter Industry A, the supply curve in Industry A will shift to the right, lowering profits in A The process of firms leaving Industry B and entering A will continue until firms in both industries are earning zero economic profit That suggests an important long-run result: Economic profits in a system of perfectly competitive markets will, in the long run, be driven to zero in all industries Eliminating Economic Profit: The Role of Entry The process through which entry will eliminate economic profits in the long run is illustrated inFigure 9.14 "Eliminating Economic Profits in the Long Run", which is based on the situation presented in Figure 9.7 "Applying the Marginal Decision Rule" The price of radishes is $0.40 per pound Mr Gortari’s average total cost at an output of 6,700 pounds of radishes per month is $0.26 per pound Profit per unit is $0.14 ($0.40 − $0.26) Mr Gortari thus earns a profit of $938 per month (=$0.14 × 6,700) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 499