In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market.

Question

Quizplus · Accepted Answer

If the price is less than the average total cost for all possible levels of production, the firm cannot cover its costs in the long run, leading it to exit (or not enter) the market to avoid losses.

In the Long Run, When Price Is Less Than Average