In a constant-cost industry, price always equals:
A) LRMC and minimum LRAC.
B) LRMC and LRAC, but not necessarily minimum LRAC.
C) minimum LRAC, but not LRMC.
D) LRAC and minimum LRMC.
E) minimum LRAC and minimum LRMC.

Question

Quizplus · Accepted Answer

In a constant-cost industry, the long-run market supply curve is perfectly elastic, meaning that firms enter and exit the market until price equals the long-run marginal cost (LRMC) and the minimum long-run average cost (LRAC). This ensures that firms are producing at their most efficient point and that the price reflects the lowest cost of production in the long run.

In a Constant-Cost Industry, Price Always Equals