The basic distinction between the short run and the long run in a perfectly competitive industry is that in the long run,firms

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In the short run, firms in a perfectly competitive industry may earn economic profits or incur losses while facing a fixed number of firms in the market. However, in the long run, firms are free to enter or exit based on their economic profits or losses, which results in the market adjusting to a state of zero economic profits in the long run. This requires new firms to enter the market until the price falls to equal the minimum average total cost of production, or for existing firms to exit the market if they are unable to cover their costs.

The Basic Distinction Between the Short Run and the Long