When a perfect competitive industry is in long-run equilibrium, a firms have no incentive to enter or exit the industry.

Question

Quizplus · Accepted Answer

In a long-run equilibrium of a perfectly competitive industry, all of the above conditions hold true. The market price is determined by the intersection of the industry supply and demand curves and each firm produces at the minimum efficient scale, where the market price is equal to the minimum long-run average cost. Since each firm is earning a normal profit, there is no incentive for firms to enter or exit the industry.

When a Perfect Competitive Industry Is in Long-Run Equilibrium, a Firms