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