A. Use the indicated price and cost data to complete the following table. 2. A. False. In long-run equilibrium, every firm in a perfectly competitive industry earns zero excess profit. Following a decrease in industry prices, high cost producers will be forced to exit. However, remaining firms will continue to operate and earn a normal rate of return on investment.
Pure competition exists in a market when individual firms have no influence over price.
Such firms take industry prices as a given. Downward sloping demand curves follow from the law of diminishing marginal utility and characterize both perfectly competitive and monopoly market structures. Horizontal demand curves characterize perfectly competitive firms. A decrease in the price elasticity of demand would result following an increase in monopoly power.