Principles of Microeconomics / Unit 17 MIC 1624 short lesson, about 20 seconds
Supply, Entry and Exit
Captions available
The idea
A competitive firm's supply is marginal cost above the shutdown point. Profit draws entry, shifting supply right and lowering price; loss drives exit. The long run ends at price equal to marginal cost at minimum average cost, zero economic profit.
In practice
Each newcomer shaves the price until profit is gone.
Where people slip
Zero economic profit is normal profit; nobody loses in the long run.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
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