The long-run supply curve of a firm follows the conditions and.

P > LRAC : exit

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P < LRAC : exit

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P > LRAC : produce

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P < LRAC : produce

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Solution

The correct options are
B P < LRAC : exit
C P > LRAC : produce
If P < LRAC, the firm exits. If P > LRAC, the firm produces at an output level corresponding to MR=MC.

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The costs (LRAC) and prices (P) for four firms are given in the options below. Which of these cannot lie on the long-run supply curve of a firm?

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