Question

In long-run perfectly competitive equilibrium, economic efficiency is achieved because Select one: a. price equals long-run marginal cost for every firm in the industry. b. price equals average fixed cost for every firm in the industry. c. price equals minimum long-run average cost for every firm in the industry. d. both a and c

Answer 1

Answer: Option (d) is correct.

Step-by-step explanation:

Correct option: both a and c

In a long run perfectly competitive market, economic efficiency is achieved because the price of the competitive firms is equal to the marginal cost and minimum of average total cost.

This productive and economic efficiency occurs when the equilibrium output is produced at a minimum average total cost. Price is also equal to the marginal cost.

Those firms which are having high unit costs will not be able to cope with the market price that is driven down by the competitive industries.