Question

In the long run, a firm is in equilibrium under perfect competition when it ______.

Options

• Has no fixed factors and earns supernormal profit

• Has no tendency to change output or plant size and earns normal profit

• Produces maximum output and earns maximum total revenue

• Operates at any point on its LMC curve

Answer 1

In the long run, a firm is in equilibrium under perfect competition when it has no tendency to change output or plant size and earns normal profit.

Explanation:

A firm is in long-run equilibrium when it does not want to change its output or scale of plant and earns only normal profit. This means it is fully adjusted to market conditions and has no incentive to expand or contract.