8b - PURE COMPETITION - LONG RUN EQUILIBRIUM AND EFFICIENCY Show From Short-run to Long-run in Perfectly Competitive Markets (econclassroom.com 21:23) Review:
Long Run Equilibrium A normal profit (zero economic profits) is what we would expect individual firms in a perfectly competitive market to earn in the long run because there are no barriers to entry. Why do perfectly competitive firms only earn a normal profit in the long run?
8b - Allocative and Productive Efficiency in Perfectly
Competitive Markets (econclassroom.com 19:35) Introduction
Review
How Perfectly Competitve Marlkets achieve Productive Efficiency in the long Run
How Perfectly Competitve Markets achieve Allocativetive Efficiency in the long Run
Perfectly competitive firms achieve both productive and allocative efficiency in long run equilibrium
When a perfectly competitive industry is in long run equilibrium all firms in the industry?A perfectly competitive market achieves long‐run equilibrium when all firms are earning zero economic profits and when the number of firms in the market is not changing. Minimization of long‐run average total cost.
What do perfectly competitive firms do in the long run?In the long run, perfectly competitive firms will react to profits by increasing production. They will respond to losses by reducing production or exiting the market.
When a perfectly competitive firm is in long run equilibrium price is equal to quizlet?In long-run equilibrium in a perfectly competitive market, free entry and exit of firms guarantees that economic profits are zero for all firms. Since profits are zero, price in the long-run must be equal to the minimum of long-run average cost (LAC).
|