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Which of the following is the set of conditions necessary for long-run equilibrium for a perfectly competitive firm?
A) P = SRMC < SRAC = LRAC
B) P > SRMC = SRAC = LRAC
C) P = SRMC = SRAC > LRAC
D) P = SRMC = SRAC = LRAC
Long-run Equilibrium
A state in which all factors of production and outputs are variable, leading to a situation where all firms in a market are making normal profit.
Perfectly Competitive
characterizes a market structure where there are many buyers and sellers, all selling homogeneous products, with no single participant able to influence the market price of the product.
Conditions
The circumstances or factors affecting the way in which people live or work, especially with regard to their safety or well-being.
- Explain the conditions required for long-run equilibrium in perfectly competitive firms.
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Learning Objectives
- Explain the conditions required for long-run equilibrium in perfectly competitive firms.
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