A necessary condition for an industry to be in long- run competitive equilibrium is:
A)each firm's profit is positive, but very small.
B)the firm's short- and long- run marginal costs are equal.
C)consumers' surplus is maximized.
D)total revenue is greater than LTC for each firm.

Question

Quizplus · Accepted Answer

In long-run competitive equilibrium, firms in the industry must be producing at their efficient scale, which means that their short-run and long-run marginal costs are equal. This ensures that resources are being used efficiently and that there are no opportunities for firms to increase profits by adjusting their output levels. Choices A, C, and D are not necessary conditions for long-run competitive equilibrium.

A Necessary Condition for an Industry to Be in Long-