In long-run equilibrium, output is expanded to the minimum long-run average total cost by

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In long-run equilibrium, price takers (firms in perfect competition) expand output to the minimum long-run average total cost due to free entry and exit, which drives economic profits to zero. Competitive price searchers (monopolistic competition) do not achieve this because they face downward-sloping demand curves and have some market power, leading to excess capacity.

In Long-Run Equilibrium, Output Is Expanded to the Minimum Long-Run