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In the short run and long run the firm will profit maximise where marginal cost equals marginal revenue. In the short run average revenue may exceed average cost and the firm may make supernormal profit. However, in the long run new firms will be attracted into the industry by the supernormal profits. This will shift the average revenue curve to the left until eventually average revenue is equal to average cost - normal profit.
Perfection competition is an industry made up of a large number of small firms, each selling homogeneous (identical) products to a large number of buyers. In perfect competition all firms are too small to have any market power and so they will act as "price-takers" and simply charge the market price. In a perfectly competitive market, a firm can only profit maximise in the short term, producing at the level where MC=MR and can make abnormal profit. However, in the long run a perfectly competitive firm will neither make losses nor abnormal profits, because if they were many new firms will be keen to enter the market. This will increase supply, causing firms to earn normal profit. .
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Long run equilibrium in perfect competition occurs where marginal cost, marginal revenue, average cost and average revenue are all equal.
In long run equilibrium in perfect competition there will be the optimum levels of allocative and productive efficiency and there will simply be normal profit.
A monopoly market, in theory, an industry where one firm produces the entire output of a market. In practice, in the UK any one firm that has 25% of a market is considered to have monopoly control. To profit maximise, a monopoly will produce where MC = MR and price on its demand curve. Therefore the firm is going to make abnormal profits, as AR is greater than AC at the equilibrium, price discrimination or rigging the market will ensure further profit maximisation. Due to it being a contestable market, as shown, there are little barriers to entry and competition is welcomed to increase efficiency.