Long run equilibrium - perfect competition, Microeconomics

Long run equilibrium - Perfect competition:

In the long-run, on the other hand, the firm in perfect competition is making normal profit or zero economic profit as shown in Figure below (total cost equal total revenue)

2005_Long run equilibrium - Perfect competition.png
Figure: The Long-run Equilibrium Position of the Perfectly Competitive Firm.


The existence of positive economic profit in the short-run serves as an incentive for new firms to join the industry, especially since there are no barriers to entry. The process of new entry will persist until the profit of each firm in the industry is competed out. That is, excess supply and continuous downward review of price to the level where price (P) equals average total cost (LAC) will engender zero economic or normal profit in the long-run.

Posted Date: 1/3/2013 1:22:47 AM | Location : United States







Related Discussions:- Long run equilibrium - perfect competition, Assignment Help, Ask Question on Long run equilibrium - perfect competition, Get Answer, Expert's Help, Long run equilibrium - perfect competition Discussions

Write discussion on Long run equilibrium - perfect competition
Your posts are moderated
Related Questions
what is the demand when expanding healthcare infrastructure?

what is the theory of second best? prove the theorem with the help of a diagram.

Draw the suitable graph for each situation and describe a real world situation in health care in which the market structure utilized in the question may exist. Demand: P=6,000-0


2ALBr3+3K2so4--->6KBr+1Al2(so4)3

Suppose that the U.S. Department of Agriculture (USDA) administers the price floor for cheese, set at $0.17 per pound of cheese. (The price floor is officially set at $16.10 per hu

uses of time series in indian economy

The East Asian Miracle However the set of extraordinarily successful economies isn't limited to the set of original OECD economies. Economies of the East Asian miracle have ove

Problem: i) What might be the possible causes of inflation according to economic theory? ii) Taking stable prices and full employment as two macroeconomic objectives of gov