Economic profit is an incentive for new firms to enter the market. In the long run, entry
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Economic profit is an incentive for new firms to enter the market. In the long run, entry increases supply, which lowers the price and increases the quantity of drones demanded. As the price of a drone falls, economic profit decreases. In the new long-run equilibrium, the price of a drone is lower and drone producers make zero economic profit.
Figure 2
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