When is a competitive market in equilibrium? Equilibrium price and market price are the same thing (always equal)? When there are decreasing returns to scale, the law of supply holds. This law states that ---- A fourth law of economics is the law of equal returns. This law says that ----. Why do we expect returns to equalize? Say revenues in an industry are $150 million annually; production costs in the industry are $125 million annually. What is the rate of return in this industry? Suppose constant returns to scale in the production of a particular good, and free entry into the market for that good. Where would we expect the price of that good to end up? What is an isoquant? What is a production function? Say there are DRS. If market supply falls ceteris paribus, what would happen to price? -Say there are DRS. If market demand falls ceteris paribus, what would happen to price? OK, now say there are CRS in the production of a good, and market demand for that good falls ceteris paribus. What would happen to price?