Asked by Adrian Batista on Jul 16, 2024
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The stable, long-run equilibrium in a competitive market occurs when the market price equals the lowest point on a firm's average total cost curve.
Average Total Cost
The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.
Long-Run Equilibrium
Long-run equilibrium occurs when an economy's resources are fully employed and the output and input markets are in balance, with no external forces causing disruption.
Market Price
The current price at which a good or service can be bought or sold in a marketplace.
- Explicate the linkage between market price, average total cost, and the operations of a firm across short-term and long-term periods.
- Comprehend the mechanisms of entry and exit in a competitive market and their effects on market equilibrium.
Verified Answer
Learning Objectives
- Explicate the linkage between market price, average total cost, and the operations of a firm across short-term and long-term periods.
- Comprehend the mechanisms of entry and exit in a competitive market and their effects on market equilibrium.
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