In a long-run perfectly competitive equilibrium

Name: In a long-run perfectly competitive equilibrium
Brand: Quizplus
Rating: 4.7 (45 reviews)

Question

Quizplus · Accepted Answer

In long-run equilibrium in a perfectly competitive market, price (P) equals both marginal revenue (MR) and marginal cost (MC), as firms cannot earn economic profits in the long-run due to easy entry and exit. Furthermore, in the long-run, firms will produce at the minimum efficient scale, leading to average total cost (ATC) being equal to MC. Therefore, P = MR = MC = ATC.

In a Long-Run Perfectly Competitive Equilibrium