When a perfectly competitive industry is in long-run equilibrium, firms maximize profits, and entry forces the price down
a. until all loss making firms leave the industry.
b. until each firm can earn acceptable level of economic profit.
c. until price becomes tangent to the long run average cost curve.
d. until the long average cost curve rises above the demand curve.
c
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Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."
What will be an ideal response?
The primary purpose of a conglomerate merger is
a. to achieve economies of scale available through increased production of a single good. b. to allow for decentralized management by spreading authority of a number of people spread throughout company locations. c. to avoid adverse effects of business cycles through diversification. d. to reduce competition by purchasing and then closing competing firms.