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1 March, 08:40

In the long run for a competitive firm,

a. the firm is making economic profits.

b. the marginal cost is greater price.

c. the firm is at the bottom of its short run average cost curve.

d. the firm is at the top of its long run average cost curve.

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Answers (1)
  1. 1 March, 10:23
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    The correct answer is letter "C": the firm is at the bottom of its short run average cost curve.

    Explanation:

    Competitive firms are companies that accept the equilibrium price of a given good or service within a market. If they try to raise the price, they will not be able to sell their products. It is said that in the long term a competitive firm is at the bottom of its short-run average cost curve because it portraits the most efficient level of production. That curve shows the optimal least-cost input combination for producing output.
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