Assume that all of the inputs used in a particular perfectly competitive industry can be increased without bidding up their prices.The long run supply curve for that industry will be:

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In a perfectly competitive market, firms can enter or exit the market freely. As a result, in the long run, new firms will enter if the existing firms are earning a profit or some firms may exit if they are incurring losses. This movement of firms in and out of the market keeps the price at the minimum point of the long-run average cost curve. As all inputs can be increased without affecting their prices in a perfectly competitive industry, new firms can easily enter the market and increase the industry supply. This, in turn, keeps the long-run supply curve of the industry horizontal at the minimum point of the long-run average cost curve.

Assume That All of the Inputs Used in a Particular