Market Structure and Pricing — Economics STD 11 — Question

In the long run, all the factors are variable.
The LAC curve is an envelope curve as it contains a few average cost curves.
It is a flatter ‘U’ shaped one. It is also known as the planning curve.

1. The firms will earn an only normal profit.
2. All the firms in the market are in equilibrium. So entry and exit of a firm is not possible./li>
   
3. A firm under perfect competition, in the long run, is a price-taker. It takes the price of the product from the industry. And it superimposes its cost curves on the revenue curves.Long-run equilibrium is at the minimum point of LAC. In the diagram AC = AR, at equilibrium E price is 8 and output is 500. At this point, the profit of the firm is only normal.The condition for the long-run equilibrium of the price is.
   Price = AR = MR = Minimum AC. At this equilibrium.
   1. SAC > LAC
   2. Long run equilibrium price is lower than the short-run equilibrium price.
   3. Long run equilibrium quantity is larger than short-run equilibrium quantit