The diagram below represents the long run equilibrium of a firm in Perfect Competition - Leaving Cert Economics - Question 2 - 2019
Question 2
The diagram below represents the long run equilibrium of a firm in Perfect Competition.
(i) Write in words the full label (not abbreviations) for each of the lines ... show full transcript
Worked Solution & Example Answer:The diagram below represents the long run equilibrium of a firm in Perfect Competition - Leaving Cert Economics - Question 2 - 2019
Step 1
Write in words the full label (not abbreviations) for each of the lines numbered 1 and 2
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Answer
Marginal cost
Average cost
Step 2
The price the firm will charge for its output (use label P1)
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Answer
The firm will charge a price of P1 as indicated on the vertical axis.
Step 3
The output the firm will produce in equilibrium (use label Q1)
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Answer
The firm will produce an output of Q1, where the marginal cost (MC) equals marginal revenue (MR), maximizing its profit.
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