1) In a perfectly competitive market, a firm in long-run equilibrium will be ope

Question

1) In a perfectly competitive market, a firm in long-run equilibrium will be operating A) at the minimum of the long-run average cost curve. B) at the minimum of the marginal cost curve. C) to the left of the minimum of the long-run average cost curve. D) to the right of the minimum of the long-run average cost curve.

2)Price equals the minimum of long-run average cost A) whenever average revenue equals marginal cost. B) along a horizontal long-run supply curve, but not along an upward sloping long-run supply curve. C) in a long-run equilibrium. D) in a short-run equilibrium as well as in a long-run equilibrium.

Explanation / Answer

1. In the long run equilibrium it is said that all the firms earn zero economic profit(that is break even).

The firm in the long run equilibrium will be operating at the minimum of long run average total cost curve.

2. Price equals the minimum of long run average cost in a long run equilibrium.

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