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Examine the difference between the short run price and the long run price of a firm under perfect competition. |
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Answer» There is a major difference between the short run and long run price under perfect competition. In the short run, price should be equal to or greater than the minimum AVC. If the price falls below this level, the firm will shut down production. On the other hand, the long run price should be equal to or greater than the minimum AC. Below this level, the firm will shut down production. |
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