Exhibit 8-18 A typical firm in a perfectly competitive market
-As shown in Exhibit 8-18, the perfectly competitive firm is in long-run equilibrium at an output of:

Question

Exhibit 8-18 A typical firm in a perfectly competitive market 
-As shown in Exhibit 8-18, the perfectly competitive firm is in long-run equilibrium at an output of:

Quizplus · Accepted Answer

The perfectly competitive firm is in long-run equilibrium where its marginal cost (MC) equals its marginal revenue (MR), and MC cuts the minimum point of the average total cost (ATC) curve. In this case, the MC and MR intersect at a quantity of 400 units per week, which also corresponds to the minimum point of the ATC curve. At this level of output, the firm earns zero economic profit (total revenue equals total cost), but it is able to cover all its variable and fixed costs. Therefore, choice C is the best answer.

Exhibit 8-18 a Typical Firm in a Perfectly Competitive Market