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Question
Explain the long-run equilibrium of the industry.
Explain
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Solution
In the long run, there is MR = MC, which cuts MR from below. Again, LAC = AR. Long-term profits remain consistent. The industry is in equilibrium when all firms are in the same position and there is no entry or exit.
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Chapter 11: Equilibrium of Firm and Industry Under Perfect Competition - TEST QUESTIONS [Page 11.12]
