In the long run, perfectly competitive firms make
â–¼
zero
negative
positive
economic profits because of entry and exit whenever there are industrywide economic profits or losses.
Part 2
A constant-cost industry has a
â–¼
horizontal
vertical
long-run supply curve. An increasing-cost industry has
â–¼
an upward
a downward
-sloping
long-run supply curve. A decreasing-cost industry has
â–¼
a downward
an upward
-sloping
long-run supply curve.
Part 3
In the long run, a perfectly competitive firm produces to the point at which price, marginal revenue, marginal cost, short-run minimum average cost, and long-run minimum average cost are all
â–¼
zero
equal
maximized
minimized
.
Part 4
Perfectly competitive pricing is essentially
â–¼
marginal cost
marginal revenue
pricing. Therefore, the perfectly competitive solution is called efficient because
â–¼
marginal revenue
marginal cost
represents the social opportunity cost of producing one more unit of the good.