Long-Run Equilibrium for a Perfectly Competitive Firm Occurs When _____

question 200

Multiple Choice

Long-run equilibrium for a perfectly competitive firm occurs when _____

• A)price (P) = marginal cost (MC) = short-run average total cost (SRATC) = long-run average cost (LRAC).
• B)marginal cost (MC) = marginal revenue (MR) = average fixed cost (AFC) = short-run average total cost (SRATC).
• C)marginal cost (MC) = marginal revenue (MR) = price (P) > long-run average cost (LRAC).
• D)price (P) = marginal revenue (MR) = long-run average variable cost (LRAVC) = long-run average cost (LRATC).
• E)marginal cost (MC) = marginal revenue (MR) = average fixed cost (AFC) = long-run average cost (LRAC).

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Definitions:

Risk-free Rate

The return on investment of a theoretically risk-less security, often represented by the yield on government bonds.

Risk Premium

The additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.

Risky Asset

An investment that holds a significant chance of losing all or part of its value.

Risk-free Asset

An investment option that ensures a definite return and carries no risk of losing money.