Figure 13-3
-Refer to Figure 13-3.Which of the points in the above graph are possible long-run equilibria?
A)A and B
B)A and C
C)A and D
D)B and D

Question

Figure 13-3 
-Refer to Figure 13-3.Which of the points in the above graph are possible long-run equilibria?
A)A and B 
B)A and C 
C)A and D 
D)B and D

Quizplus · Accepted Answer

In the long-run equilibrium of a perfectly competitive market, firms operate where the average total cost (ATC) is at its minimum and where the price equals the marginal cost (MC) and the average total cost. Point C represents this situation, where the demand curve (which is also the price line) touches the ATC at its lowest point. Point A is not a long-run equilibrium because, although the price equals MC, it is not at the minimum of the ATC, indicating the firm could lower its costs further. Points B and D are not at the minimum of the ATC curve either, making A and C the correct choices for possible long-run equilibria.

Figure 13-3 -Refer to Figure 13-3.Which of the Points in the Above