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Assume the following for a certain industry:
(1) there is no incentive for firms to enter or exit the industry; (2) for some firms in the industry, short-run average total cost is greater than long-run average total cost at the level of output where marginal revenue equals marginal cost; (3) all firms in the industry are currently producing the quantity of output at which marginal revenue equals marginal cost.
Is the industry in long-run competitive equilibrium?

Respuesta :

Answer:

No, the perfect competition industry is not at long run equilibrium

Explanation:

Perfect Competition is a market form with many buyers & sellers, selling homogeneous goods at uniform prices.

Short run equilibrium is when :

Marginal Revenue = Marginal Cost

However, Long Run Equilibrium is when :

Marginal Revenue = Marginal Cost = Average Total Cost

{both short run & long run MC & AC}

But, it is given that :  for some firms in the industry, short-run average total cost is greater than long-run average total cost at the level of output where marginal revenue equals marginal cost

So, it is not the Perfect competition long run equilibrium

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