Arrange the following steps in the correct order of how a firm adjusts its output in response to economic profits in a competitive market: A) Entry of new firms increases market supply B) Existing firms earn economic profits C) Price falls due to increased supply D) Firms adjust output to maximize profits

In a competitive market, when existing firms earn economic profits, it signals that the market is doing well. This profit attracts new firms to enter the market, which increases the overall market supply. As more firms start producing similar goods, the increased supply leads to a decrease in prices. Finally, firms will adjust their output to maximize their profits based on the new market price. For example, if a bakery is making high profits, other bakers may open shops, leading to more bread available in stores and lower prices for consumers.