In the long run,which of the following is true?
A)Cost effects offset price effects.
B)Profit effects are larger than cost effects.
C)Cost effects are larger than profit effects.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

In the long run, cost effects tend to offset price effects. This is because in a competitive market, firms will adjust their output and processes to minimize costs, and prices will adjust to reflect the overall costs of production across the market. This adjustment process leads to a situation where the impact of cost changes on a firm's profitability is neutralized by corresponding changes in prices.

In the Long Run,which of the Following Is True