Long-run Equilibrium

Definition

Long-run equilibrium refers to a state in which all firms in an industry are earning zero economic profits. In this situation, there is no incentive for firms to enter or exit the market.

Related terms

Short-run Equilibrium: Short-run equilibrium refers to the temporary state where some firms may be earning positive or negative economic profits due to fixed factors of production.

Market Structure: Market structure describes how competitive an industry is based on factors like number of sellers, product differentiation, and barriers to entry.

Perfect Competition: Perfect competition is a market structure characterized by many buyers and sellers, identical products, easy entry/exit, and no individual firm has control over prices.