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Question
The market for watches is perfectly competitive and is currently in equilibrium. What will happen if watches become more popular among college students?
a. In the short run, firms will experience economic profits, but in the long run, firms will leave the market, bringing economic profits back down to zero.
b. In the short run, firms will experience economic profits, but in the long run, firms will enter the market, bringing economic profits back down to zero.
c. In the short run, firms will incur economic losses, but in the long run, firms will leave the market, bringing economic profits back down to zero.
d. In the short run, firms will incur economic losses, but in the long run, firms will enter the market, bringing economic profits back down to zero.
e. In both the short run and the long run, firms will experience zero economic profits.
Answer
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