Answered: n the long run, perfectly competitive…

n the long run, perfectly competitive firms are at equilibrium when: (LMC = Long-Run Marginal Cost; LAC = Long-Run Average Cost) a.P = LAC > LMC b.P = LMC = LAC. c.P = LMC > LAC d.P = MR.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 7WNG

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Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

In the long run, perfectly competitive firms are at equilibrium when:

(LMC = Long-Run Marginal Cost; LAC = Long-Run Average Cost)

a.P = LAC > LMC

b.P = LMC = LAC.

c.P = LMC > LAC

d.P = MR.

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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