In a perfectly competitive industry, what will happen in the long-run when the current price exceeds the short-run average cost? Why is this efficient? When we talk about perfect competition we mean a market structure that leave firms in a unique brand of competition. In fact a firm does not actually compete under perfect competition, it reacts to the market conditions, taking price and other market factors as beyond its control. A market is a …showed first 75 words of 1074 total…

…showed last 75 words of 1074 total…to finish on is that the desire to make above normal profits results in a zero profit equilibrium in the competitive market. Firms will make a normal profit, but no more. Appendices Fig 1 - The demand Curve for a firm in Perfect Competition Fig 2 - Profit Maximising Output for the Competitive Firm Fig 3 – Equilibrium Positions for a Competitive Firm Fig 4 – Capital Change Resultant From Price Exceeding Average Costs. Fig 5 – Long Run Equilibrium in perfect Competition