Final answer:
In the long run, firms in a perfectly competitive industry required to adopt antipollution devices would earn zero economic profits and produce smaller amounts of output. The market forces drive economic profits to zero and the increased costs can reduce industry output.
Step-by-step explanation:
If all firms in a perfectly competitive industry are required to adopt antipollution devices, the long-run results would be that the firms would be earning zero economic profits and the industry will be producing smaller amounts of output. The correct answer is D: Zero economic profits; smaller.
In a perfectly competitive market, positive economic profits attract new firms, while economic losses lead to firms exiting the market. With the introduction of antipollution devices, the costs for all firms would increase, which would initially decrease economic profits. However, in the long run, as the market adjusts, firms will only continue to operate if they can cover these additional costs, which means profits will be driven down to zero due to competitive forces. Furthermore, as costs rise, some firms may exit the market, or the remaining firms may reduce output, leading to a smaller total output in the industry.