The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive market.

-Refer to the figure above.How low can the price in this market go for this firm to still be able to operate in the long run?
A) $3
B) $4
C) $5
D) $0

Question

The following figure shows the marginal cost curve and the average total cost curve of a firm operating in a perfectly competitive market.
 
-Refer to the figure above.How low can the price in this market go for this firm to still be able to operate in the long run?
A) $3 
B) $4 
C) $5 
D) $0

Quizplus · Accepted Answer

In the long run, the firm will be able to operate if the price is at least equal to the average variable cost. In this case, the average variable cost is $3, so the firm will be able to operate if the price is at least $3.

The Following Figure Shows the Marginal Cost Curve and the Average