exit in response to losses, the price level in a perfectly competitive market will move toward the zero-profit
210 8 • Self-Check Questions

point, where the marginal cost curve crosses the AC curve at the minimum of the average cost curve.

The long-run supply curve shows the long-run output supplied by firms in three different types of industries:

constant cost, increasing cost, and decreasing cost.

8.4 Efficiency in Perfectly Competitive Markets

Long-run equilibrium in perfectly competitive markets meets two important conditions: allocative efficiency

and productive efficiency. These two conditions have important implications. First, resources are allocated to

their best alternative use. Second, they provide the maximum satisfaction attainable by society.

Self-Check Questions

1. Firms in a perfectly competitive market are said to be “price takers”—that is, once the market determines
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