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In long-run equilibrium, a competitive firm produces at the level of output where marginal cost (MC) equals marginal revenue (MR), which is also equal to the market price (P). This occurs at the minimum point of the average total cost (ATC) curve, ensuring that the firm earns zero economic profit. At this point, the firm's resources are allocated efficiently, and there is no incentive for firms to enter or exit the market. Thus, the firm operates at an optimal scale in the long run.
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What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
What factors determine the equilibrium price and quantity for a perfectly competitive firm in the long run?
In the long run, the equilibrium price and quantity for a perfectly competitive firm are determined by factors such as production costs, market demand, and competition from other firms. The firm will adjust its output level until it reaches a point where marginal cost equals marginal revenue, resulting in an equilibrium price and quantity.
What is equilibrium output?
It is the output of an economy that equates aggregate supply with aggregate demand.
Is monopoly determined by market equilibrium?
No, monopoly is not determined by market equilibrium. A monopoly exists when a single firm dominates the market for a particular good or service, often due to barriers to entry that prevent other firms from competing. In contrast, market equilibrium occurs when supply equals demand, which can happen in both competitive and monopolistic markets. While a monopolist can influence prices and output, it does not operate under the same conditions as a competitive market seeking equilibrium.
Are monopolistically competitive firms efficient in long-run equilibrium?
Monopolistically competitive firms are not considered to be perfectly efficient in the long run. This is because they have some degree of market power due to product differentiation, which can lead to higher prices and lower output compared to perfectly competitive markets.
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
What factors determine the equilibrium price and quantity for a perfectly competitive firm in the long run?
In the long run, the equilibrium price and quantity for a perfectly competitive firm are determined by factors such as production costs, market demand, and competition from other firms. The firm will adjust its output level until it reaches a point where marginal cost equals marginal revenue, resulting in an equilibrium price and quantity.
What is equilibrium output?
It is the output of an economy that equates aggregate supply with aggregate demand.
Is monopoly determined by market equilibrium?
No, monopoly is not determined by market equilibrium. A monopoly exists when a single firm dominates the market for a particular good or service, often due to barriers to entry that prevent other firms from competing. In contrast, market equilibrium occurs when supply equals demand, which can happen in both competitive and monopolistic markets. While a monopolist can influence prices and output, it does not operate under the same conditions as a competitive market seeking equilibrium.
Are monopolistically competitive firms efficient in long-run equilibrium?
Monopolistically competitive firms are not considered to be perfectly efficient in the long run. This is because they have some degree of market power due to product differentiation, which can lead to higher prices and lower output compared to perfectly competitive markets.
If the equilibrium output is below potential output?
This is known as the recessionary gap
What is firm equilibrium?
Firm equilibrium refers to a situation where a firm achieves a balance between its costs and revenues, maximizing profits. This is attained when the firm produces the level of output where marginal cost equals marginal revenue. It represents the point of optimization for the firm.
What is competitive supply?
There is competitive supply,if an increase in the output of one commodity requires a reduction in the output of another commodity.
What happens to the equilibrium wage and quantity of labor if output rises?
The equilibrium wage falls and the equilibrium quantity of labor rises
What determinis the amount of output an economy produces?
haw the amount of output an economy produces can be determinis?
While producing less then the competitive output decreases social welfare. Can it be said about producing more than the competitive output?
Yes
How do you find equilibrium price when given output and total cost?
The equilibrium price is the unit cost, which is the same as the total cost divided by the number of units produced (output).
