Question

Which of the following is NOT a characteristic of long-run equilibrium for a perfectly competitive firm? Select one:
a. The firm produces the output level at which long-run average cost is at its minimum.
b. Price is greater than long-run average cost.
c. Price is equal to long-run marginal cost.
d. Economic profit is zero.

Answer 1

Answer: "b. Price is greater than long-run average cost." is NOT characteristic of long-run equilibrium for a perfectly competitive firm.

Explanation: In the long term the company will produce the output level at which long-run average cost is at its minimum.

Where the price is equal to the long-run marginal cost and the long-run average cost.