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How Firm Behave under Perfect Competition in the Short and Long Run.
Perfect competition is a market structure characterized by a large number of buyers and sellers of essentially the same product. The firms produce a standardized product and there is a free entry and exit of these firms to and from the industry. The firm in a purely competitive market faces a perfectly elastic demand curve at the price determined by equilibrium in the market (Hirschey 379).
The firm in a short-run supply curve is the short-run marginal cost curve above the minimum point on the average variable cost curve, also known as the shutdown point. In the short run, firms behave…
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