Producer's Equilibrium | MR-MC Approach | Imperfect Competition - Case 2 | Class 11 Microeconomics

Under Perfect Competition, we know that a firm is unable to affect the price of a product even if it modifies the quantity of its output. Also, in this market structure, the input and cost conditions are given. Therefore, a firm can change the quantity of the output of a product without affecting its price. The cost and revenue conditions of a firm determine its equilibrium state (maximum profits). In this article, we will talk about a firm’s long-run equilibrium under Perfect Competition.

Equilibrium under Perfect Competition – II
A competitive firm is in equilibrium when it earns maximum profits. This invariably depends on the cost and revenue conditions of the firm. Further, the cost and revenue conditions vary on the short and long run. Therefore, a competitive firm has four equilibrium states based on its period of operation. These are:

Short-run equilibrium of a competitive firm
Long-run equilibrium of a competitive firm
Short-run equilibrium of a competitive industry
Long-run equilibrium of a competitive industry
Today, we will talk about a firm’s long-run equilibrium under Perfect Competition.

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