At the same time, though, there will still be more firms entering this industry, because there is still some profit to be made in this business. As the new firms enter, supply will expand some more and the price will fall again. If we assume that there is no profit masquerading as cost, then the incentive to enter this industry is gone. No more firms would enter, so the price would stop falling. At this point, competition has forced the price down to its minimum.
All excess profit is squeezed out.
The firms have been forced to be just the right size to minimize cost. The customer gets the most possible value per dollar spent. This example works as happily as it does because we assume that there are diminishing returns to scale, so Joan's marginal cost rises when her output rate is high. If Joan's costs fell as her firm got bigger, competition would force her firm to grow and grow. One possibility is to innovate, to change how she operates.