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:

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, indicating how efficiently a company is producing its goods.

Cost Flow Assumption

A method of accounting designated to assess inventory worth and calculate the cost of goods sold, which can be either FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Physical Flow of Goods

Refers to the actual movement of goods through the production process to the customer, distinct from the accounting or paper flow.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, assigning weights to each number based on its significance.