APFIVE Perfect Competition Long-Run Adjustment
In what way does the transition from short-run profit to long-run equilibrium in a perfectly competitive market demonstrate the principle of market efficiency?
A
Consumer demand shifts to ensure all firms remain profitable indefinitely
B
Economic profits attract new firms, increasing supply and driving prices down to the point where all firms earn normal profits
C
Firms collude to maintain high prices and profits in the long run
D
Government intervention ensures fair distribution of profits among all market participants
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