What is the condition for the long run equilibrium of the competitive firm ........

Economics- Phase (I & II) Demand and Supply , Market Structures

What is the condition for the long-run equilibrium of the competitive firm?

P=MR

LMC=LAC=P

SMC=SAC=LMC

All of the above

- Option 1: P=MR

- In perfect competition, price equals marginal revenue.

- This is necessary for profit maximization, but doesn’t capture cost conditions.

- Option 2: LMC=LAC=P

- In the long run, firms in perfect competition produce where long-run marginal cost equals long-run average cost and price.

- This condition reflects zero economic profit, meaning no incentive for entering or exiting the market.

- Option 3: SMC=SAC=LMC

- This condition suggests short-run and long-run marginal and average costs are equal.

- It’s not directly relevant to competitive equilibrium.

- Option 4: All of the above

- Only Option 2 is the correct condition for long-run equilibrium.

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