When a Competitive Price-Taker Market Is in Long-Run Equilibrium

question 223

Multiple Choice

When a competitive price-taker market is in long-run equilibrium

• A) the firms in the market will earn zero economic profit.
• B) the average total cost of the firms in the market will be minimized.
• C) every unit of the relevant good that is valued more than its opportunity costs will be produced and sold.
• D) all of the above are correct.

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Definitions:

Selling Price

Selling price is the amount a buyer pays to purchase a product or service from a seller.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor costs.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance, providing predictability but fixed financial commitments.

Break-Even Point

The financial point at which total revenues exactly equal total costs, resulting in neither profit nor loss.