Question of the Day: Day Twelve

(Continue to) Assume that the market for apples is perfectly competitive in that all apples are the same, and there are a large number of apple selling firms. We know that this market is characterized by increasing costs in the long run - which implies something about the long run market supply curve.

Answer the following questions below, based on the information given above.

1) If firms in this market were earning positive economic profit, then how would we reflect such a situation on a graph (of the apple market as a whole) that includes the long run supply curve?

2) How would this market adjust over the long run to the idea that firms are currently earning positive economic profit?