| A | B |
|---|
| short-run equilibrium in good times | market demand and market supply determine the price and quantity bought and sold; ATC = TC / Q of output produced |
| in the long run, a firm in perfect competition | earns normal profit, earns zero economic profit and incurs no economic loss |
| in the short run | a perfectly competitive firm might make an economic profit or incur an economic loss |
| entry and exit | influence price, quantity produced, and economic profit |
| normal profit = | zero economic profit |
| firms that adopt new technology | make an economic profit and new-technology firms enter |
| firms that stay with old technology | incur economic losses and either exit or adopt new technology |
| as new-technology firms enter and old-technology firms exit | price falls and quantity produced increases |
| demand curve = | marginal benefit curve |
