-The relationship between demand and average cost shown in this figure could be found in a purely competitive market in:
A) the short run but not the long run.
B) the long run but not the short run.
C) either the short run or the long run.
D) neither the short run nor the long run.

Question

-The relationship between demand and average cost shown in this figure could be found in a purely competitive market in:
A) the short run but not the long run. 
B) the long run but not the short run. 
C) either the short run or the long run. 
D) neither the short run nor the long run.

Quizplus · Accepted Answer

In a purely competitive market, firms can experience economies of scale in the short run, leading to a downward-sloping average cost curve. However, in the long run, firms will enter or exit the market until profits are zero, and the average cost equals the price, eliminating any downward slope in the average cost curve.

-The Relationship Between Demand and Average Cost Shown in This