Final answer:
The entry of new firms in a market with existing firms earning positive profits leads to a decrease in economic profits for all firms until the market reaches a zero-profit level.
Step-by-step explanation:
When new firms enter into a market where most existing firms are earning positive profits, it leads to changes in the market dynamics. Initially, the existing firms in the market are earning economic profits due to limited competition. However, the entry of new firms attracts more competition, causing the supply curve to shift to the right. As a result, the market price starts decreasing, and economic profits fall for both new and existing firms. This process continues until the market price reaches the zero-profit level, where no firm is earning economic profits.