The long-run equilibrium condition for perfect competition is:
A) P = AVC = MR = MC.
B) P = ATC = MR = MC.
C) Q = AVC = MR = MC.
D) Q = ATC = MR = MC.
E) TR = ATC = MR = MC.

Question

Quizplus · Accepted Answer

In the long-run equilibrium condition for perfect competition, firms in the industry are earning only normal profit. This means that price (P) is equal to average total cost (ATC). In addition, in perfect competition, marginal revenue (MR) is equal to marginal cost (MC) at the profit-maximizing level of output. Therefore, the correct long-run equilibrium condition is P = ATC = MR = MC.

The Long-Run Equilibrium Condition for Perfect Competition Is