A perfectly competitive firm will stay in business as long as the price per unit equals or exceeds its average total cost.

Question

Quizplus · Accepted Answer

In perfect competition, firms will continue to produce and sell as long as the price per unit is equal to or greater than its average total cost, because at that point the firm is earning a normal profit. If the price falls below the average total cost, the firm will incur losses and may eventually exit the market in the long run.

A Perfectly Competitive Firm Will Stay in Business as Long