Competitive Markets for Goods and Services
Read this chapter for an explanation of the model of perfect competition, which is crucial to your understanding of the more complicated and realistic models that will be studied next. Take a moment to read through the stated learning outcomes for this chapter of the text, which you can find at the beginning of each section. These outcomes should be your goals as you read through the chapter. Attempt the "Try It" problems at the end of each section.
4. Perfect Competition in the Long Run
4.2. Answer to Try It! Problem
The availability of economic profits will attract new firms to the jacket industry in the long run, shifting the market supply curve to the right. Entry will continue until economic profits are eliminated. The price will fall; Acme’s marginal revenue curve shifts down. The equilibrium level of economic profits in the long run is zero.