Social Sciences and History / Unit 13 SSH 1235 short lesson, about 20 seconds
Entry, Exit, and the Long-Run Supply Curve
Captions available
The idea
In the long run firms respond to profits by entry and to losses by exit. Entry and exit push the market price toward the zero-profit point. The long-run supply curve shows the output firms supply in constant-cost, increasing-cost and decreasing-cost industries.
In practice
Long-run equilibrium: price equals average cost, zero profit.
Where people slip
Perfect competition meets both efficiencies, allocative and productive.
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