Which of the following is a characteristic of the long-run equilibrium in perfect competition?
A. Firms earn supernormal profits
B. Price is greater than marginal cost
C. Price equals minimum average cost and firms earn normal profits
D. Firms operate with excess capacity
Answer: Option C
Solution (By JKSSB Mock Tests)
In long-run equilibrium under perfect competition, free entry and exit ensure that price equals minimum long-run average cost and firms earn only normal profits.
Explanation:
The Big Push theory, associated with Rosenstein-Rodan, argues that a large, coordinated investment is required to overcome complementarities and indivisibilities in developing economies.
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