The minimum feasible long run average cost for firms in a
What is the market price?
Concept Introduction:
Perfect competition: The perfect competition is a purely competitive market selling homogenous products. The characteristics of perfect competition are, there are many buyers and sellers, firms get freedom of entry and exit which means at any time, a new firm can enter into the market or an existing firm can leave the market. All products produced in the market are homogenous and identical. The firm is a price taker. Market price is determined by demand and supply forces. The consumers have full knowledge about the market situations and no single firm can alter the market price by changing their product’s price. During the long run, firms make normal profits and during the short run, firms make only super normal profits.
Marginal Cost: Marginal cost is the additional cost incurred by firms when producing one more unit of the commodity.
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