If there is a positive level of output at which a firm’s profit is maximised in the long run, three conditions must hold at that output level. Which of the following is not such condition?
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: LRMC is decreasing
If there is a positive level of output at which a firm’s profit is maximised in the long run, three conditions must hold at that output level
(i) p = LRMC
(ii) LRMC is non-decreasing
(iii) p ≥ LRAC.