Explain Why the Long-Run Product Price for a Perfectly Competitive

question 225

Essay

Explain why the long-run product price for a perfectly competitive firm will equal its minimum average total cost.

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Definitions:

Price Level

A gauge for the typical costs of goods and services across the economy.

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, or value of goods and services.

Inflation Rate

The rate of increase in prices across a broad spectrum of goods and services, resulting in reduced purchasing power.

Saving

The portion of income not spent on consumption but kept aside for future use, often in a deposit account or as an investment.