Which of the following is true for a perfectly competitive firm in the long run?
ID: 1165420 • Letter: W
Question
Which of the following is true for a perfectly competitive firm in the long run?
Question 3 options:
The firm's demand curve will be vertical.
Economic profits will greater than zero.
A firm will produce at the quantity of allocative efficiency.
A firm will produce at a quantity of productive inefficiency.
all of the above
The firm's demand curve will be vertical.
Economic profits will greater than zero.
A firm will produce at the quantity of allocative efficiency.
A firm will produce at a quantity of productive inefficiency.
all of the above
Explanation / Answer
In the long run, under perfect competetion, price equals marginal cost and price also equals the minimum point of the average total cost curve and the firms earn zero economic profits. Thus the firms produce at a quantity of allocative efficiecy which is indicated by the price and marginal cost equality and the firms also produce a quantity of productive efficiency which is indicated by the price and average total cost equality.
A firm will produce at the quantity of allocative efficiency.
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