In a perfectly competitive market, what relationship holds true in the long run?

Multiple choice question for Costs , Supply And Perfect Competition. Select an option, then review the explanation below.

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Price equals both average cost and marginal costPrice is equal to average cost and total costPrice matches marginal cost and total costTotal revenue is the same as total variable cost

Explanation

In the long run under perfect competition, firms produce where price equals average cost and marginal cost, ensuring zero economic profit. Option A correctly represents this equilibrium, while the other options do not accurately describe the long-run condition.

Practice related questions from the same subject.

1.In the context of a perfectly competitive firm, what represents its short-run supply curve and its long-run supply curve respectively?
2.Under what condition will a firm cease production and produce nothing in the short term?
3.In the short run, the average total cost is composed of which two components?
4.What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
5.What does it indicate when the long-run average cost curve slopes downward from left to right?

In a perfectly competitive market, what relationship holds true in the long run?

Explanation

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