If a price- taking firm is in short- run equilibrium, it must also be in long- run equilibrium.

Question

Quizplus · Accepted Answer

In short-run equilibrium, a price-taking firm can still make positive or negative economic profits, which is not a condition for long-run equilibrium. In long-run equilibrium, firms make zero economic profit, as entry and exit from the market have adjusted supply to the point where price equals long-run average cost.

If a Price- Taking Firm Is in Short- Run Equilibrium