Question

In a perfectly (or purely) competitive industry, all firms have the same costs. All firms have a minimum average total cost of $100 at a quantity of 200 and a minimum average variable cost of $46 at a quantity of 100. Initially, the industry is in long‑run equilibrium. Suppose that the demand for the product decreases. Rank the events in the order that each occurs after demand decreases until price returns to long‑run equilibrium. Note that not all of the events need to be placed. Demand decreases … until the market reaches the long run equilibrium price.

Answer 1

Answer:

At the long run equilibrium price, the firm produce the level of output, where the price equals minimum average total cost

P=min ATC

At the long run equilibrium , the price is $100 per unit.

Explanation: