00:01
So here we're talking about perfect competition.
00:03
And the first rule of perfect competition is that in the long run, nobody makes profits.
00:10
That's what we mean by competition, right? if profits, something must happen, right? something must happen.
00:19
Something must happen to reduce profits, right? so how do we reduce profits? well, in a marketplace, if we think of a marketplace quantity and price, we think of demand and supply.
00:39
If profits, it must be the case that we know something about the market price, right? the price must be too high, too high, right? the price is not sustainably high.
00:55
So what happens when there's profits? when profits, firms enter to get those profits, right? that's what profits does.
01:07
If there are profits, other firms are going to be attracted to the industry in search of those profits...