When a Firm in a Price-Taker Industry Is in Long-Run

question 7

Multiple Choice

When a firm in a price-taker industry is in long-run equilibrium, the market price equals

• A) marginal cost but may be greater or less than average total cost.
• B) both average total cost and marginal cost.
• C) average total cost but may be greater or less than marginal cost.
• D) marginal revenue but may be greater or less than both average total cost and marginal cost.

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Definitions:

Willingness To Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting their valuation of it.

Trade Agreement

A contractual arrangement between countries regarding their trade relationships and tariffs.

Microeconomics

Branch of economics that deals with the behavior of individual economic units—consumers, firms, workers, and investors—as well as the markets that these units comprise.

Benefit

The advantage or profit gained from something.