In long-run equilibrium in perfect competition:
A)price is greater than average total cost.
B)price is equal to average total cost at an output less than the output at which average total cost is minimized.
C)price is equal to average total cost at its minimum.
D)price is equal to average total cost at an output greater than the output at which average total cost is minimized.

Question

Quizplus · Accepted Answer

In long-run equilibrium in perfect competition, price is equal to minimum average total cost, as firms have had time to adjust their production levels and enter or exit the industry. At this level of output, firms are producing as efficiently as possible, with the lowest possible average total cost. Therefore, choice C is the correct answer.

In Long-Run Equilibrium in Perfect Competition