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Identify and explain the conditions for Long-Run Equilibrium in a perfectly competitive market.

Identify and explain the conditions for Long-Run Equilibrium in a perfectly competitive market.

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In long run many firms enter into the perfectly competitive market. As a result, the price level fall in long run continuously until it reaches to LAC (Long run Average Cost) curve. As in long run price becomes equal to LAC, hence in long run the perfectly competitive firms earn zero economic profit. In the above picture's diagram the long-run market price is P. Firms in long run at price level of P earns zero economic profit. Because in the above diagram for firms at long run equilibrium P = MR = AR = LMC = LAC occurs.

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