The shape of the long-run cost curve is determined by economies and diseconomies of scale. Contrast this curve with the short-run cost curve as it relates to increasing and diminishing marginal returns to labor.
Describe an industry that would meet the conditions of a perfectly competitive industry and how the individual firms would respond to an increase in the market demand for the product.
When developing short-run cost curves, it is assumed that all firms in perfect competition have the same cost curves and they all make identical short-run profits or losses. Contrast this to the real world and why individual firms might experience different cost curves and different profits.