Assume a purely competitive firm is maximizing profit at some output at which long-run average total cost is at a minimum.Then
A)the firm is earning an economic profit.
B)there is no tendency for the firm's industry to expand or contract.
C)allocative but not productive efficiency is being achieved.
D)other firms will enter this industry.

Question

Quizplus · Accepted Answer

When a purely competitive firm is producing at the minimum point of its long-run average total cost curve, it is achieving productive efficiency and earning normal profit. There is no incentive for firms to enter or exit the industry, so there is no tendency for the industry to expand or contract.

Assume a Purely Competitive Firm Is Maximizing Profit at Some