Terms in this set (37)

long-run market equilibrium; when the quantity supplied equals the quantity demanded, given that sufficient time has elapsed for entry into and exit from the industry to occur.
(All existing and potential producers have fully adjusted to their optimal long-run choices; as a result, no producer has an incentive to either exit or enter the industry)
-The price is equal to marginal cost in a long-run equilibrium in perfect competition.
-The total cost of production is minimized when a competitive industry is in a long-run equilibrium.
-In long-run equilibrium, the market price equals minimum average total cost.

In a perfectly competitive industry with free entry and exit each firm will have zero economic profits in long run equilibrium.
Long run market equilibrium of a perfectly competitive industry is efficient; no mutually beneficial transactions go unexploited

In long run, firms will enter the industry whenever existing firms are making a profit, that is whenever the market price is above the break-even price.
When additional farms enter the industry the quantity supplied will increase. The short-run industry supply curve will shift to the right which will alter the market equilibrium and result in a lower market price.
Existing farms will respond to the lower market price by reducing their output but the total industry output will increase because of the large number of firms in the industry

-When new firms enter supply increases, price decreases, quantity increases, continues till profit=0 (no incentive for firms to enter or exit)