Long-Run Outcomes in Perfect Competition
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In this Module, you will learn to:
• Explain why industry behavior differs between the short run and the long run
• Discuss what determines the industry supply curve in both the short run and the long run
Up to this point we have been discussing the perfectly competitive firm’s short-run situation—whether to produce or not, and if so, whether the firm earns a positive profit, breaks even with a normal profit, or takes a loss. In this module, we look at the long-run situation in a perfectly competitive market. We will see that perfect competition leads to some interesting and desirable market outcomes. Later, we will contrast these outcomes with the outcomes in monopolistic and imperfectly competitive markets.