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3. Explain briefly why the free entry and exit of firms in the LR ensures the cost ar production efficiency with efficiency c
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The firm will be allocative efficient if they are producing at a point were the price and MC are equal, they are allocative efficient becasue the cost of producing those goods are same as the value assigned by the consumer to the good. perfectly competitive market always remain allocative efficient.

In the long run the firm becomes productive and allocative efficient both because at this point the firm produces at the lowest point of the ATC and stays in long run equilibrium i.e. no profit or no loss in the market and breaking even only.

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