-Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, the firm will

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm will stay in the market in the long run if it can cover its average total costs (ATC) with the market price. Since the market price is $15, as long as the ATC at the profit-maximizing output is less than or equal to $15, the firm will make zero economic profit (breaking even) and will have no incentive to leave the market. The absence of information about specific costs does not change this general principle.

-Giuseppe's Pizza Is a Perfectly Competitive Firm