Draw the long-run equilibrium graph for a perfectly competitive firm. Be sure to label the quantity Q*, the price P*, the average cost per unit ATC*, and shade any profit or loss region (if there is one!

Draw the long-run equilibrium graph for a perfectly competitive firm. Be sure to label the quantity Q, the price P, the average cost per unit ATC*, and shade any profit or loss region (if there is one!

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 19SQ

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Question

Draw the long-run equilibrium graph for a perfectly competitive firm. Be sure to label the quantity Q*, the price P*, the average cost per unit ATC*, and shade any profit or loss region (if there is one!).

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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Using the graph from the previous question, explain why a competitive industry is efficient. Be sure to distinguish between productive efficiency and allocative efficiency.

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