Question: 4.12. AVERAGE AND MARGINAL COST. Show that, in a long-run equilibrium with free entry and equal access to the best available technologies, the comparison of

4.12. AVERAGE AND MARGINAL COST. Show that, in a long-run equilibrium

4.12. AVERAGE AND MARGINAL COST. Show that, in a long-run equilibrium with free entry and equal access to the best available technologies, the comparison of price to the min- imum of average cost or the comparison of price to marginal cost are equivalent tests of allocation efficiency. In other words, price is greater than the minimum of average costs if and only if price is greater than marginal cost. Show, by example, that the same is not true in general (hint: consider a short-run equilibrium)

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