The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
-If losses are incurred in a competitive industry, then over the long-run we can expect a greater quantity supplied, because market price will rise.
Definitions:
ATC
The total cost per unit of output, calculated by dividing the total cost by the amount of output produced.
Long-Run Equilibrium
A state in which all factors of production are fully adjusted to the economic conditions, leading to a situation where there is no tendency for change.
Purely Competitive Firm
refers to a company that operates in a market where there are many buyers and sellers, no barriers to entry, and the product is a commodity, leading the firm to be a price taker.
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