1. Less competition
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly

2. $ $ S
d = p P* D Q* Q q
Industry
Firm

3. Profit maximizing condition:$ MC
Profit maximizing condition:
Economic π
MR = MC
ATC
d = p
= mr
π = TR - TC P*
ATC*
TR = P *q
TC = ATC * q q1 q* q2 q

4. FIGURE 7.3 Long-Run Adjustment in Perfect Competition: Entry and Exit

5. Long-run equilibrium with short-run profits$ $ MC S0
Economic π
ATC S1
d0 = p0 = mr0 P0 P0
ATC0
d1 = p1 = mr1 P1
P1 = ATC1
Economic π = 0 D Q0 Q1 Q q1 q0 q

6. Long-run equilibrium with short-run losses
Economic losses (π < 0) $ $
ATC MC S0
ATC0
d1 = p1 = mr1 P1
P1 = ATC1
d0 = p0 = mr0 P0 P0
Economic π = 0 D Q1 Q0 Q q0 q1 q