Answer:
Market supply is much more elastic in the long run than the short run.
Explanation:
Here are the options to this question :
In the long run, average total cost is minimized
Market supply is much less elastic in the long run than the short run.
In the long run, price equals marginal cost.
Market supply is much more elastic in the long run than the short run.
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
When the supply curve is horizontal or nearly so, it means that supply is highly elastic. a small change in price would greatly affect the quantity supplied.
