Figure 13-6
-Refer to Figure 13-6.The diagram depicts a firm
A) in a constant cost industry.
B) in an increasing cost industry.
C) in long run equilibrium.
D) that is making short run losses.

Question

Figure 13-6 
-Refer to Figure 13-6.The diagram depicts a firm
A) in a constant cost industry. 
B) in an increasing cost industry. 
C) in long run equilibrium. 
D) that is making short run losses.

Quizplus · Accepted Answer

The diagram shows that the long run average cost (LRAC) curve is tangent to the demand curve at the equilibrium point. This indicates that the firm is producing the optimal output level in the long run, with no incentive to enter or exit the market. Therefore, the firm is in long run equilibrium.

Figure 13-6 -Refer to Figure 13-6.The Diagram Depicts a Firm