Factors inducing entry or exit of the firmsperfect competition. Introduction: Perfectly Competitive Firms: Perfectly Competitive firms in industries which have large number of firms and they exactly produce identical product or homogeneous product. Long run average cost curve : This is also known as the planning curve. This curve depicts the future. So it shows about the long run plan of a plant about its cost structure. Increasing returns to scale: It is the concept that discusses how the cost per unit of production reduces with large volume of production. It exist in the falling range of long run average cost curve (LRATC) Decreasing returns to scale: It is the concept that discusses how the cost per unit of production increases with large volume of production. It exist in the rising range of long run average cost curve (LRATC) Constant returns to scale: It is the concept that discusses how the cost per unit of production remains constant with large volume of production. It exists in the minimum range of long run average cost curve (LRATC).

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Chapter 23, Problem 23.5LO

To determine

Factors inducing entry or exit of the firmsperfect competition.

Introduction:

Perfectly Competitive Firms: Perfectly Competitive firms in industries which have large number of firms and they exactly produce identical product or homogeneous product.

Long run average cost curve: This is also known as the planning curve. This curve depicts the future. So it shows about the long run plan of a plant about its cost structure.

Increasing returns to scale: It is the concept that discusses how the cost per unit of production reduces with large volume of production. It exist in the falling range of long run average cost curve (LRATC)

Decreasing returns to scale: It is the concept that discusses how the cost per unit of production increases with large volume of production. It exist in the rising range of long run average cost curve (LRATC)

Constant returns to scale: It is the concept that discusses how the cost per unit of production remains constant with large volume of production. It exists in the minimum range of long run average cost curve (LRATC).

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