Suppose there are no recurring fixed costs and the daily production process for all identical firms in a perfectly competitive industry has decreasing returns to scale throughout.Then each firm will only produce a single good each day when the industry is in long run equilibrium.

Question

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In a perfectly competitive market, firms will continue to enter the market as long as they can earn a profit. In a situation where there are decreasing returns to scale, larger firms will have higher average costs and therefore smaller profit margins. This means that smaller firms will be able to earn profits and will continue to enter the market until each firm is producing at the minimum efficient scale. Therefore, in long run equilibrium, each firm will only produce a single good each day.

Suppose There Are No Recurring Fixed Costs and the Daily