For these reasons, the number of firms in a perfectly competitive market is unlikely to remain unchanged in the long‐run. Alternatively, existing firms may choose to leave the market if they are earning losses.
New firms will be tempted to enter the market if some of the existing firms in the market are earning positive economic profits.
Recall that in a perfectly competitive market, there are no barriers to the entry and exit of firms. The ability to vary the amount of input factors in the long‐run allows for the possibility that new firms will enter the market and that some existing firms will exit the market. In the long‐run, firms can vary all of their input factors. Labor Demand and Supply in a Perfectly Competitive Market.Equilibrium in a Perfectly Competitive Market.Monopolistic Competition in the Long-run.Demand in a Perfectly Competitive Market.Classical and Keynesian Theories: Output, Employment.
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