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    Long run equilibrium

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    A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of $450. If the firm produced 800 units per day , its total cost would be $300, and if it produced 500 units per day,its total cost would be $275. What are the firms average total cost per unit a these levels of productions? If every firm in this industry has the same cost structure, it the industry in long-run competitive equilibrium?

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    Solution Preview

    ATC at a production volume of 1000 units=Total cost/output=450/1000=$0.45
    ATC at ...

    Solution Summary

    Solution determines if the industry is in long run equilibrium in the current situation.