9/23/2023 0 Comments Will ATC curve shift when perfectly competitive indstury adjusts to new long run equilibirum![]() ![]() ![]() These changes continue until the remaining firms in the industry cover their total costs and normal profits. This results in a rise in price and a drop in costs as the industry contracts. ![]() On the other hand, if firms make losses in the short-run, then they leave the industry in the long-run. These changes continue until the AC curve is tangential to the demand curve. If a firm earns supernormal profits in the short run, then the industry will attract new firms into it.Įventually, this leads to a fall in prices of the goods and an increase in prices of the factors as the industry expands. In the long run, a firm just earns normal profits. This curve is tangential to the market price defined demand curve. In the long run, a firm achieves equilibrium when it adjusts its plant/s to produce output at the minimum point of their long-run Average Cost (AC) curve. 3 Solved Question Long run Equilibrium Long Run Equilibrium of the Firm ![]()
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