Long-Run Adjustment

A perfectly competitive market achieves long‐run equilibrium when all firms are earning zero
economic profits and when the number of firms in the market is not changing.
Firms in the perfect competition market structure earn zero economic profit (normal profit). It is done to
the market adjustments, (i) entry and exit; and (ii) expansion and construction to production scale (e.g. changes
in plant size) in the long-run.

Entry and Exit

When firms enter the market:
 Total output in the market increases & market supply increases.
 Price falls in market.
When firms exit the market:
 Total output in the market decreases & market supply decreases
 Price rises in market

EXPLANATION:
Ang Long run adjustment ay ang pag-ayos sa isang firm or business na kumikita ng zero profit (kita), at kapag
ang production or products ay walang pagbabago. Kapag nagkakaroon ng mga ganitong problema sa iswang
business, kailangang natin mag take ng action paano mapalago uylit ang business, so in order to do that may
mga terms of adjustments tayong strategy ito ay ang entry and exit at expansion and construction to production
scale (changes in plant size)

Sa Entrance, ito ay kapag ini-export natin and production sa market or ang pagpasok ng products sa market.
Dito sa process na to, tumataas ang market sales or binebenra at ang pagkalat ng productions at ang pricing ay
mababa lang or affordable kasi madami ang pasok ng production. Sa ganun ay mas binibilisan ang
pagpapalabas ng products.

Pero sa case naman ng exit ng production, it means papalabas na ito sa market or nagkukulang na ng
production. At kapag nagkukulang ng production sa market or sa supply, tumataas ang prices. Dahil kulang ang
products kaya di basta basta pinapalabas.