Properties of long-run competitive equilibrium with free entry include:
A) an equilibrium price equal to the minimum MC.
B) firms earning positive profits.
C) active firms producing at their efficient scales of production.
D) All of these are properties of long-run competitive equilibrium.

Question

Quizplus · Accepted Answer

In a long-run competitive equilibrium with free entry, firms produce at their efficient scale, where average total cost is minimized. This ensures that no firm has an incentive to enter or exit the market, as all firms are earning zero economic profit, not positive profits (eliminating B), and the equilibrium price equals the minimum of average total cost, not marginal cost (eliminating A).

Properties of Long-Run Competitive Equilibrium with Free Entry Include