Properties of long-run competitive equilibrium with free entry include
A) The equilibrium price must equal the minimum AC
B) Firms must earn zero profits
C) Active firms must produce at their efficient scale of production
D) All of these

Question

Quizplus · Accepted Answer

In long-run competitive equilibrium with free entry, the equilibrium price must equal the minimum average cost (A), firms must earn zero economic profits (B), and active firms must produce at their efficient scale of production (C). These conditions ensure that no new firms will enter the market and existing firms will stay in the market, resulting in a stable equilibrium.

Properties of Long-Run Competitive Equilibrium with Free Entry Include