A market with constant costs is in long-run equilibrium when it experiences a permanent increase in demand.
Market supply ________ and the market price ________.
Market output ________ and in the long run each remaining firm makes ________ profit.

Question

Quizplus · Accepted Answer

In the long run, firms can enter or exit the market, so the market supply will increase to meet the increased demand. The market price will fall until it reaches each firm's minimum average total cost, at which point each firm will be making zero economic profit.

A Market with Constant Costs Is in Long-Run Equilibrium When