Which of the following is a characteristic of the long-run equilibrium in perfect competition?
A. Firms operate with excess capacity
B. Price equals minimum average cost and firms earn normal profits
C. Firms earn supernormal profits
D. Price is greater than marginal cost
Answer: Option B
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:
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