What happens in perfect competition in the long run?what happens?

2 Answers

readerofbooks's profile pic

readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted on

Here is another perspective and a few other outcomes that may take place.

1. When there is perfect competition, the products in view will get better and better. Consider PC and Apple computers. The competition is fierce and both are coming out with better products.

2. The consumer gets more for his or her money. When there is competition, companies need to keep prices attractive, or else they will lose people. Hence, the consumer benefits.

3. There will be no monopolies, which is a good thing.

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

This is a bit vague because lots of stuff happens in the long run in perfect competition.  But the major things would be that:

  • Firms make zero economic profit.  If firms make economic profit, other firms get into the business and increase supply.  This lowers prices until economic profit is zero.
  • The equilibrium price will equal the minimum long-run average costs.  These two will also equal the minimum short run average cost as well as the short run marginal cost.

I'm not sure if perhaps there are other things that you are looking for.  The question was not terribly specific.