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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?

To determine

Why will firms in most markets be located at or close to the bottom of the long run average cost curve?

Explanation

How much competition is likely to be there in the market is determined by the relationship between the quantity at the minimum of the long-run average cost curve and the quantity demanded in the market at that price predict.

If the quantity demanded in the market far exceeds the quantity at the minimum of the LRAC, then many firms will compete.

If the quantity demanded in the market is only slightly higher than the quantity at the minimum of the LRAC, a few firms will compete...

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