The economy is in long-run equilibrium when
A)an optimal mix is reached.
B)input prices have fully adjusted to changes in output prices.
C)few input and output prices have adjusted.
D)change is the leading characteristic of the production factors.

Question

Quizplus · Accepted Answer

Long-run equilibrium occurs when input prices have fully adjusted to changes in output prices. This means that the economy is producing at its potential level and there are no market imbalances. In this state, firms are receiving the optimal price for their products and workers are being paid their marginal product, resulting in efficiency and maximum mutual benefit for both the producers and consumers.

The Economy Is in Long-Run Equilibrium When