Join TSR now and get all your revision questions answeredSign up now

Long run equilibrium in perfect competition? Watch

    • Thread Starter
    Offline

    0
    ReputationRep:
    Ok, I understand that abnormal profits, or losses, won't be sustained in the long run in a PC market.

    In the long run the MC curve will cross the optimum point of the ATC curve as well as the MR line at the same time so AR=AC and profits are 'normal'.

    What I don't understand is, is this the optimum point of the LRAC curve, or just of the ATC curve, which resides at a particular point (above the MES) on the LRAC?

    Because my notes from my teacher say it's the 'long run cost curve' but it wouldn't make sense if it was the lowest point of the LRAC (the MES) as one firm cannot produce up to that level in PC surely?

    I'm also confused over whether there can be both a separate industry and a firm's LRAC?
 
 
 
Poll
How are you feeling about Results Day?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.