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Perfectly Competitive Market

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Suppose that, in a perfectly competitive market at the profit maximizing quantity, the market price is greater than average total cost. Carefully explain what will happen to the number of firms, the market supply and the price of the good as we move from the short run to the long run.

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If market price is greater than average total cost, this means that as a firm, I can sell my product at a higher price than the cost I incur to produce this good. This ...

Solution Summary

Perfectly competitive market are explained in the solution. The price of goods as we move from short run to long run are determined.