8.9 : 장기적 이익 극대화

In perfect competition, the long-run competitive equilibrium is achieved at the production level when the market price equals the lowest average total cost of producing the product. It results in a zero-economic profit.

Demand increases can shift the market demand curve, pushing the market price from E1 to E2. This allows existing firms to make profits, but it also attracts new firms into the market. Firm entry shifts market supply, pushing prices to E3.

Consider a perfectly competitive market with bakeries producing bread, each striving to outdo the others.

Over time, these bakeries will optimize their use of labor, ovens, and ingredients to maximize profits.

If the prices are high and firms earn above-average profits, it will attract new bakers into the market, increasing supply and decreasing the bread price.

Conversely, if bakeries incur losses, some will exit the market, reducing supply and causing prices to rise.

This dynamic process continues until the price settles at a point where each bakery makes zero economic profit.

In this situation, firms have no incentive to change production scale due to zero economic profit. This also deters new firms from entering and existing ones from leaving the market.