- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 5. Understanding Economies and Diseconomies of Scale
CFA Practice Question
Which of the following conditions exist in long-run competitive equilibrium?
II. Individual firms operate at the most efficient scale of plant.
III. The level of output produced coincides with the minimum point on the LRAC curve.
I. P = LRAC
II. Individual firms operate at the most efficient scale of plant.
III. The level of output produced coincides with the minimum point on the LRAC curve.
A. II and III
B. I and III
C. I, II and III
Explanation: Long-run competitive equilibrium implies all of the above conditions. However, these conditions are not likely to last indefinitely. Industries adjust to long-term changes depending on both internal and external factors.
User Contributed Comments 3
| User | Comment |
|---|---|
| Bill12345 | P = Min. point on LRAC in LR Comp. Equilibrium |
| dream007 | I agree with above comment. P=LRAC is not the same as P = min of LRAC. |
| nike | P = LRAC just means P is always equal to lun run average cost. It is a correct statement (for long-run equilibrium). |