c) Long-run

c) diagrammatic analysis

no barriers to entry and exit → firms easily enter and exit the market → supply fluctuates → firms always make a normal profit in the long-run

short-run = supernormal profit

• attracts new firms

• market supply + quantity increases

• market price decreases

• AR = ATC

• firm output + price decreases

short-run = loss

• firms leave market

• market supply + quantity decreases

• market price increases

• AR = ATC

• firm output + price increases