13.3  Explain how output, price, and profit are determined in the long run.

13.3  Explain how output, price, and profit are determined in the long run.

A.  Economic profit induces entry, which increases supply and lowers price and profit.  Economic loss induces exit, which decreases supply and raises price and profit.
B.  In the long run, economic profit is zero and there is no entry or exit.
C.  The long-run effect of a change in demand on price depends on whether there are external economies (price falls) or external diseconomies (price rises) or neither (price remains constant).
D.  New technologies increase supply and in the long run lower the price and increase the quantity.

Take the optional post-study bonus point quizzes on Perfect Competition on Saturday following Module 7.

Take the optional pre-study bonus point quizzes on Monopoly on Sunday preceding Module 8.