In the short run, a perfectly competitive firm will be willing to produce even at a loss. This is because in this industry there are many firms competing with one another and they all have an incentive to produce as much as possible to drive down prices. In the long-term however, these firms end up making profits because they are able to sell their products at lower prices than before. Keywords: perfect competition, short run, long-term This post was written by a guest. For more content like this check out the blog. How to Achieve Long-Term Profit When Entering a New Industry: The Perfectly Competitive Firm A perfectly competitive firm will be willing to produce even at a loss in the short run, as long as, there are many firms competing with one another and they all have an incentive to produce as much as possible to drive down prices. In the long-term however, these firms end up making profits because they are able to sell their products at lower prices than before. In perfect competition every firm makes no economic profit from selling its goods or services for it’s price (P). This

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