Explain how the long run differs from the short run in pure competition. 

Verified Answer
The purely competitive firms can freely enter or exit in the long run. In the short run, no firm can enter or leave the market. Even the plant size is fixed in the short run. In the long run, the firm can extend or shrink the business. The number of the firms is fixed in the short run. Contrarily, in the long run, the free entry and exit of the firms increase or decrease the number of firms. In the short run if the firms earn a loss or zero profit then the firm will shut down. Due to a lack of time, the firm cannot liquid the assets and thus cannot leave the market. However, in the long run, the firms get sufficient time to liquidate the assets and leave the market.