In a perfectly competitive market, if we see the average firm making an economic profit in the short run what would we see happen as we move into the long run?
1.We would see new firms enter the market causing the market price and short run economic profits to decrease.
2.We would see new firms enter the market causing the market price and short run economic profits to increase.
3.We would see firms exit the market causing the market price and short run economic profits to decrease.
4.We would see firms exit the market causing the market price and short run economic profits to increase.