Question

Assume that tangerines are produced in a constant cost industry which sells in a perfectly competitive market. Suppose that at the current level of output, firms are earning positive economic profits. What can we say about the long run equilibrium where productive and allocative efficiency is achieved

Answer 1

In the long-run equilibrium where productive and allocative efficiency is achieved, there will be more producers and more tangerine products in the market.

What is long-run equilibrium?

The long run of a firm refers to the future term when the firm has attained equilibrium and the factory is able to produce at the output where the minimum point of the Long-Run Average Cost curve.

It is thus correct to state that In the long-run equilibrium where productive and allocative efficiency is achieved, there will be more producers and more tangerine products in the market.

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