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Impact of Demand and Supply Shifts on Equilibrium

What are the ...

Question

What are the conditions for the long-run equilibrium of the competitive market?

[1 mark]

A

LMC = LAC = P

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B

SMC = SAC = LMC

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C

P = MR

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D

P = AVC

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Solution

The correct option is A LMC = LAC = P
Producer’s equilibrium is the stage where the producer gets the maximum profit at the minimum cost. It is derived when price or AR = LAC = LMC

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