In Long-Run Competitive Equilibrium SRATC = LRATC, Because If SRATC

question 96

Multiple Choice

In long-run competitive equilibrium SRATC = LRATC, because if SRATC > LRATC (at the quantity of output at which MR = MC) firms would

• A)have an incentive to change their plant size to produce their current output.
• B)not be covering their total fixed costs.
• C)not be covering their total variable costs.
• D)a and b
• E)b and c

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Definitions:

Constant Rate

A situation or process that occurs at an unchanging, steady pace over a particular period of time.

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A staple food made from a dough of flour and water, usually by baking.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between the two goods.

Consumption Possibilities Frontier

A curve depicting all possible combinations of two goods or services that a consumer can purchase given their income and the prices of the goods.