Question

Which of the following statements is true:

Group of answer choices

None of the other answers is correct.

In the long run, under perfect competition; there are no fixed costs

In the long run, under perfect competition; price equals the minimum of the marginal cost

In the long run, under perfect competition; firms experience a perfectly inelastic demand curve

In the long run, under perfect competition; price equals the maximum of the marginal cost

Answer 1

The correct answer is that in the long run, under perfect competition, there are no fixed costs. This is because all the costs are variable in the long run because all inputs become variable in the long run.

The other options are incorrect because in the long run, equilibrium price is determined where Long run average cost is equal to marginal cost and demand curve. Price equals the minimum of long run average cost.

Firms experience a perfectly elastic demand curve under perfect competition in the long run.