"In the Long Run, a Perfectly Competitive Firm's Average Total

question 236

Essay

"In the long run, a perfectly competitive firm's average total cost is always below the market clearing price." Agree or disagree? Why?

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Definitions:

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum price that each consumer is willing to pay, thus capturing the entire consumer surplus.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved, leading to an under or overallocation of resources.

Pay-per-view

A television service allowing viewers to purchase events to be viewed on a private telecast at home.

Deadweight Loss

The loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.