[amp_mcq option1=”minimum point of LAC” option2=”highest point of LAC” option3=”minimum point of SAC” option4=”highest point of SAC” correct=”option3″]<\/p>\n
The correct answer is: C. minimum point of SAC.<\/p>\n
In perfect competition, firms are price-takers, meaning that they cannot influence the market price of their product. As a result, firms will maximize profits by producing at the point where marginal cost (MC) equals marginal revenue (MR). In the long run, firms will also have to cover their average total cost (ATC), which includes both fixed and variable costs. Therefore, the long-run equilibrium of a firm under perfect competition will be established at the minimum point of its short-run average cost curve (SAC), which is also the minimum point of its long-run average cost curve (LAC).<\/p>\n
Option A is incorrect because the minimum point of LAC is not necessarily the point of long-run equilibrium. In the short run, a firm may be able to produce at a point where MC is below MR, but in the long run, firms will have to cover their ATC in order to survive.<\/p>\n
Option B is incorrect because the highest point of LAC is the point of maximum inefficiency. A firm would never want to produce at this point, as it would be losing money.<\/p>\n
Option D is incorrect because the highest point of SAC is the point of maximum average cost. A firm would never want to produce at this point, as it would be losing money.<\/p>\n","protected":false},"excerpt":{"rendered":"
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