In a perfectly competitive market, economic profit can be positive in the long run. MR = MC because of the entry/exit adjustment process in the long-run. In the long-run, firms shut down if the market price is lower than average total cost. in the short-run, firms can stay in business when they earn negative profit.

Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run total cost curve of TC = 4Q3 – 10Q2 + 40Q + 50 where quantity is measured in thousands of boxes per week. The marginal cost of production is given by MC = 12Q2 – 20Q + 40. Calculate the price below which a firm in the market will not produce any output (the shut-down price) in short run.

If the price for a fırm's output is greater than the minimum value of its average variable cost, but less than the minimum value of its average total cost, then the firm should shut down in the short run, but resume producing in the long run. the firm should continue producing in the short run, but exit the market in the long run. the firm is earning positive economic profit. the firm should shut down in the short run and exit the market in the long run. the firm should continue producing in both the short run and the long run.

Consider a perfectly competitive market for wheat in Dallas. There are 110 firms in the industry, each of which has the cost curves shown on the following graph:     The following graph shows the market demand for wheat. Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.)   At the current short-run market price,…