What you’ll learn to do: describe how perfectly competitive markets adjust to long run equilibrium
Perfectly competitive markets look different in the long run than they do in the short run. In the long run, all inputs are variable, and firms may enter or exit the industry. In this section, we will explore the process by which firms in perfectly competitive markets adjust to long-run equilibrium. In addition, we will revisit the concept of allocative efficiency and discover how perfectly competitive firms, unlike firms in other market structures, are allocatively efficient.