Long1 - Long Run Supply Inthelongrun,. .,t

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Long Run Supply In the long-run, firms can vary all of their input factors. The ability to vary the amount of input factors  in the long-run allows for the possibility that  new firms will enter  the market and that  some existing  firms will exit  the market. Recall that in a perfectly competitive market, there are  no barriers  to the  entry and exit of firms. New firms will be tempted to enter the market if some of the existing firms in  the market are earning  positive economic profits.  Alternatively, existing firms may choose to leave  the market if they are earning losses. For these reasons, the number of firms in a perfectly  competitive market is unlikely to remain unchanged in the long-run.  Zero economic profits.  The entry and exit of firms, which is possible in the long-run, will eventually  cause each firm's  economic profits  to fall to 
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This note was uploaded on 11/19/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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