How to read this
A price taker produces where . While is above average cost the firm makes a profit (green rectangle), and that attracts entrants: each new firm adds supply and pushes the price down. Entry stops when the next firm would make a loss.
- Press One more firm a few times, then Free entry.
- Raise the market size : more firms, and the price ends closer to the bottom of average cost. In the long run, zero profit.