The Ethical Economics
Study Center


MODULE 13: Perfect Competition Theory - Part 2

Textbook Reading:

Presentation Slides:


Additional Useful Information:

Deriving the Supply Curve
Video showing the derivation of the market supply curve from the "Economists do it with Models" website.

Short-Run to the Long-Run
This YouTube video by Jason Welker offers a nice explanation of the movement from the short-run to the long-run in perfectly competitive markets.



This module demonstrates how the market supply curve is derived from the individual firms' marginal cost curves under the assumptions of perfect competition. We then consider the circumstances that would lead a firm to cease production and leave the market. Finally we examine the long-run market equilibrium that arises when new firms enter the market in response to positive profit, or exit the market following sustained losses. The long-run outcome results in zero economic profit accruing to the individual firms, which is just enough to sustain market participation.


Deriving the Short-Run Market Supply Curve - 17 minutes

When Should a PC Firm Stop Producing? - 14 minutes

Long-Run Adjustments in Perfect Competition - 23 minutes

Deriving the Long-Run Market Supply Curve - 5 minutes