Perfect Competition in the Long Run

As described in chapter 4, a long-run time frame for a producer is enough time for the producer to implement any changes to its processes. In the short run, there may be differences in size and production processes of the firms selling in the market. Some sellers may be able to make a healthy economic profit, whereas others may only barely make enough to justify continued operation and, as noted earlier, may not have sustainable operations although they may continue to operate for a while since a substantial portion of their short-run costs are sunk costs.

Due to the assumption of perfect information, all sellers know the production techniques of their competitors. As a result, any firm that intends to remain ...

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