Supply Curve in a Competitive Market
WHAT IS THE DIFFERENCE BETWEEN THE LONG-RUN AND SHORT-RUN FOR FIRMS?
-In the short-run, a firm may make a supermarket normal profit= profit which is either over or about what a normal return is expected to be, or a loss.
-If firms are facing a loss then they will exit the market and therefore earn a super-normal profit.This will attract new entrants to the market.
-In the long-run, they may exit the market.
-They do this if they are not making a profit, yet in the short run they cannot do this so as a result they have a decision whether to keep making products or to shut down.