Comparing the short- run and long- run profit- maximizing positions of a perfectly competitive firm,which statement is true?

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will produce where marginal cost equals marginal revenue, and may make a profit or loss depending on the price level. In the long run, entry and exit of firms will drive the price down to the level where it equals the minimum point of the average cost curve. Therefore, the firm will produce at minimum average cost in the long run, but not necessarily in the short run where it may operate at a loss or above average cost.

Comparing the Short- Run and Long- Run Profit- Maximizing Positions