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Pure Competition in the Long Run


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After reading this chapter, you should be able to:

  1. Explain how the long run differs from the short run in pure competition.
  2. Describe why profits encourage entry into a purely competitive industry and losses result in firms exiting the industry.
  3. Explain how the entry and exit of firms affects resource flows and long-run profits and losses.
  4. Explain the differences between constant-cost, increasing-cost, and decreasing-cost industries.
  5. Show how long-run equilibrium in pure competition produces an efficient allocation of resources.
  6. Discuss creative destruction and the profit incentives for innovation.










McConnell Economics 19eOnline Learning Center

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