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In the long-run equilibrium of a competitive market, firms operate at
  • a)
    the intersection of the marginal cost and marginal revenue
  • b)
    their efficient scale
  • c)
    zero economic profit
  • d)
    all of these answers are correct
Correct answer is option 'D'. Can you explain this answer?
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In the long-run equilibrium of a competitive market, firms operate ata...
Long-Run Equilibrium in Competitive Market

In a competitive market, long-run equilibrium occurs when the market supply and demand curves intersect at a price that ensures all firms earn zero economic profit.

Efficient Scale

At the long-run equilibrium, firms operate at their efficient scale, which is the level of production that minimizes the average cost of production.

Marginal Cost and Marginal Revenue

Firms in a competitive market operate at the intersection of their marginal cost and marginal revenue. This is because at this point, the firm is producing the output level where the additional cost of producing an extra unit of output is equal to the additional revenue generated by selling that extra unit.

Zero Economic Profit

In the long-run equilibrium of a competitive market, firms earn zero economic profit. This means that the total revenue earned by the firm is equal to the total cost of production, including the opportunity cost of resources used in production.

All Answers are Correct

Therefore, in the long-run equilibrium of a competitive market, firms operate at the intersection of their marginal cost and marginal revenue, at their efficient scale, and earn zero economic profit. Hence, option D is the correct answer.
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Features of a Mixed Economy:A mixed economy is an economic system that combines elements of both a market economy and a planned economy. It incorporates features of both private enterprise and government intervention. The correct answer is D, as all of the following features are characteristic of a mixed economy:1. Planned economy:A mixed economy includes elements of a planned economy, where the government plays a role in guiding and regulating economic activities. It formulates economic plans and policies to ensure the efficient allocation of resources and to promote economic stability.2. Dual system of pricing:In a mixed economy, there exists a dual system of pricing, which means that both market prices and government-set prices coexist. While market forces determine prices for most goods and services, the government may intervene to regulate prices in certain sectors to protect consumers or promote social welfare.3. Balanced regional development:Another characteristic of a mixed economy is the emphasis on balanced regional development. The government intervenes to ensure that economic growth and development are not concentrated in specific regions or industries but are spread across different regions and sectors. This helps to reduce regional disparities and promote overall economic stability and social welfare.Benefits of a Mixed Economy:A mixed economy offers several benefits due to its combination of market forces and government intervention. Some of these benefits include:1. Economic efficiency:By incorporating market mechanisms, a mixed economy allows for resource allocation based on supply and demand, which promotes economic efficiency. Market forces encourage competition, innovation, and productivity, leading to higher levels of economic growth.2. Social welfare:Government intervention in a mixed economy enables the provision of public goods and services that may not be adequately provided by the market alone. This includes areas such as healthcare, education, infrastructure, and social security, ensuring a certain level of social welfare and equity.3. Stability and regulation:The government's role in a mixed economy helps to maintain economic stability through macroeconomic policies such as fiscal and monetary measures. It also regulates certain sectors to prevent market failures, protect consumer rights, and ensure fair competition.Conclusion:A mixed economy combines the advantages of both market forces and government intervention. It allows for economic efficiency, social welfare, and stability. The features of a mixed economy include elements of a planned economy, a dual system of pricing, and balanced regional development. These features work together to create a system that promotes both economic growth and social welfare.

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In the long-run equilibrium of a competitive market, firms operate ata)the intersection of the marginal cost and marginal revenueb)their efficient scalec)zero economic profitd)all of these answers are correctCorrect answer is option 'D'. Can you explain this answer?
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