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In the field of economics long run refers a time period when all manufacturing factors and all cost remain variableAs firms have to adjust its production costs and other factors to exist in the market in this period. The common changes that are occurred in this time in a market are:

  • Firm can take an entry into the market to make profit
  • It can leave the market to avoid loss
  • Firm can increase its production in expectation of making more profit
  • It reduces its production to avoid further loss.

Due to enter of new industries and enhancement of production by existing firm, quantity  amount of the product enhanced rapidly in this period. No one can earn excessive profit in this situation. Excess supplied product, enhances the availability of product and reduces the price of the product. Equilibrium comes when the price becomes equal to marginal revenue, which is equal to marginal cost. The marginal cost is equal to firm’s average total cost.

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Some more information

In long run, firms can take an easy entry and exit in a perfect competitive market. In this condition firms can enhance its individual production by enhancing its variable and cost and can make changes in plant and machineries.

Due to these reasons in long run, cost curve can be shifted individually for individual firm. And price of a product always is same as its marginal cost which is equal to its minimum average cost. On the basis of these factors, product that are supplied  can be increased, may be remain same or can be decreased. It depends on basically,under which law of returns the industry is performing.

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In perfect competition

In long run supply of different industries in perfect competition are different in a market. They are classified as –

  • Industry in increasing cost

Production is enhanced in this condition so; supply curve is shifted upwards at right of the axis from the left. Our manuals can help you deal with complexities of this subject.

  • Industry in constant cost

Supply of a product remains unchanged in this situation hence, supply curve exists horizontally.

  • Industry in decreasing cost

Supply of a product is degreased here and supply curve is shifted downwards from left to right.

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Under imperfect competition 

In the monopoly as there is no competitor in that market so only one industry is existing there. It leads all the factors here, including price of a product. Firm can set the price of the product as it requires maximizing its profit.

The supply of the product is depends on consumer’s demand There is no specific amount of supply can be mentioned here and it is not possible to draw any specific supply curve in monopoly. For more please contact the industry’s long-run supply assignment help from us.

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