Asked by karamjeet singh on Jul 26, 2024
Verified
A competitive firm is producing 1,000 units of output with average total cost equal to $35 and marginal cost equal to $40. Can the market in which this firm operates be in a long-run equilibrium? Briefly explain.
Average Total Cost
The total cost of production (fixed plus variable costs) divided by the number of units produced.
Marginal Cost
The rise in production costs when one more unit of a product or service is produced.
Long-Run Equilibrium
A state in which a market or economy has adjusted to all internal and external changes and forces, resulting in no incentive for allocation or production adjustments.
- Assess the criteria necessary for long-run equilibrium within competitive markets and the response mechanism to changes in demand.
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Learning Objectives
- Assess the criteria necessary for long-run equilibrium within competitive markets and the response mechanism to changes in demand.
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