The overall market price determines the individual demand for each firm Ultimately, the long-run equilibrium occurs when each firm in the industry supplies a quantity that generates zero economic profits in the long run. Further, no barriers exist that would prevent any one firm from easily entering or exiting the market. Each buyer is fully informed about all potential alternative sellers. Each seller simply chooses a level of output that maximizes economic profits, given the existing price. As a result, no single buyer or seller can independently influence the market price. A perfectly competitive market is characterized by a large number of firms with identical production cost structures that are selling identical products or services to a very large number of consumers.
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