Which of the following explains why in the long run the purely competitive firm produces at...

Which of the following explains why in the long run the purely competitive firm produces at lowest possible cost? Select one:

a. There are no advertising costs to add to production costs.

b. The demand is equal to average revenue which equals marginal revenue curve is perfectly elastic and intersects the long run average cost curve at its lowest point,thus, the firm produces at full capacity.

c. There are no economic profits.

d. All of the above are correct.

Expert Solution

"B"

The demand is equal to average revenue which equals marginal revenue curve is perfectly elastic and intersects the long run average cost curve at its lowest point, thus, the firm produces at full capacity. the answer is "B".

Rahul Sunny answered 2 years ago

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