In the long run for a competitive firm,

Question

Quizplus · Accepted Answer

In the long run, a competitive firm must produce at the minimum efficient scale. This means that it should produce at the lowest point on its long run average cost curve. However, in the short run, the firm's production is constrained by its fixed inputs. As a result, the firm may not be producing at the minimum efficient scale, and its short run average cost curve may be higher than the long run average cost curve. However, in the long run, the firm can adjust its production levels and inputs, and it should produce at the minimum efficient scale. This means that the firm should produce at the lowest point on its long run average cost curve. Therefore, the correct choice is A).

In the Long Run for a Competitive Firm