A competitive firm's long-run equilibrium exists where price
A)equals MC at minimum ATC.
B)equals TR.
C)exceeds AFC.
D)equals both AVC and MC.
E)exceeds ATC.

Question

Quizplus · Accepted Answer

In the long run equilibrium, a competitive firm will produce at the minimum point of its average total cost (ATC) curve. At this point, price will be equal to marginal cost (MC) and the firm will be operating at maximum efficiency. Therefore, the correct choice is A, which states that price equals MC at minimum ATC.

A Competitive Firm's Long-Run Equilibrium Exists Where Price