In the Long-Run Equilibrium of a Market with Free Entry

question 151

Multiple Choice

In the long-run equilibrium of a market with free entry and exit, if all firms have the same cost structure, then

• A)marginal cost exceeds average total cost.
• B)the price of the good exceeds average total cost.
• C)average total cost exceeds the price of the good.
• D)firms are operating at their efficient scale.

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Definitions:

Price Range

The spread between the highest and lowest selling price of a product or service in the market.

Pure Competition

A market structure characterized by a large number of small firms producing identical products, with no single firm able to influence the market price.

Commodity Products

Basic, undifferentiated products or raw materials that are interchangeable with others of the same type.

Agribusinesses

Companies involved in the agricultural industry, dealing with the production, processing, and distribution of agricultural products.