The condition of the long run equilibrium for a competitive firm is ______.

MC = MR = AR

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MC = AC = AR

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MC = MR = AC

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MC = MR = AR = AC

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Solution

The correct option is B MC = AC = AR
For a firm to be in long run equilibrium, it must firstly satisfy the profit maximization condition which is LMC = MR, and also that the LMC curve cuts the MR curve from below and secondly P(AR) = AC. Furthermore, under perfect competition, AR = MR. Thus, we have the condition LMC = MR = AR = LAC

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