Refer to Figure 16-6. If the firm is maximizing profit, the firm is in

A) a short-run equilibrium but it is not in a long-run equilibrium.
B) a long-run equilibrium but it is not in a short-run equilibrium.
C) a short-run equilibrium as well as a long-run equilibrium.
D) neither a short-run equilibrium nor a long-run equilibrium.

Short-Run Equilibrium

A state in which the quantity supplied equals the quantity demanded within a market, but only for a temporary period due to fixed inputs in production.

Long-Run Equilibrium

A state in which all firms in a market or industry are making normal profits, with no incentives for entry or exit, and all factors of production are perfectly mobile.