Asked by
Joshua Hernandez
on Nov 27, 2024
Verified
When a purely competitive firm is in long-run equilibrium,
A) marginal revenue exceeds marginal cost.
B) price equals marginal cost.
C) total revenue exceeds total cost.
D) minimum average total cost is less than the product price.
Long-run Equilibrium
A state in which, given enough time for all adjustments to be made, there is no incentive for firms to enter or exit an industry, and prices stabilize.
Marginal Revenue
The extra income a business earns by selling an additional unit of a product or service.
Marginal Cost
The elevated cost associated with manufacturing an additional unit of a product or service.
- Understand the relationship between marginal cost, average total cost, and price in determining long-run equilibrium.
Verified Answer
AF
Learning Objectives
- Understand the relationship between marginal cost, average total cost, and price in determining long-run equilibrium.