Asked by Lisbeth Galvan on Jul 09, 2024
Verified
The long-run equilibrium in a competitive market characterized by firms with identical costs is generally characterized by firms operating at efficient scale.
Long-Run Equilibrium
A state in which all factors of production and costs are variable, allowing firms to enter and exit the market, and no economic forces are pushing for change.
Efficient Scale
The level of production at which a company or industry can produce its products at the lowest average cost, optimizing resource use.
Identical Costs
Costs that are the same in amount or value, often referring to uniform expenses across different units or operations.
- Illustrate the connection between market price, average total cost, and business functions during both short and long-term phases.
- Gain insight into the factors contributing to the absence of economic profit over time in perfectly competitive environments.
Verified Answer
Learning Objectives
- Illustrate the connection between market price, average total cost, and business functions during both short and long-term phases.
- Gain insight into the factors contributing to the absence of economic profit over time in perfectly competitive environments.
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