When firms exit a perfectly competitive industry, the market supply curve shifts to the left quizlet1/31/2024 Hence, in the long‐run each firm earns normal profits. The entry and exit of firms, which is possible in the long‐run, will eventually cause each firm's economic profits to fall to zero. For these reasons, the number of firms in a perfectly competitive market is unlikely to remain unchanged in the long‐run. Alternatively, existing firms may choose to leave the market if they are earning losses. New firms will be tempted to enter the market if some of the existing firms in the market are earning positive economic profits. Recall that in a perfectly competitive market, there are no barriers to the entry and exit of firms. The ability to vary the amount of input factors in the long‐run allows for the possibility that new firms will enter the market and that some existing firms will exit the market. In the long‐run, firms can vary all of their input factors.
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