In a perfectly competitive market, when the price is greater than the minimum average total cost for most firms, some firms will _______ the market until the price ______ to equal the minimum average total cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, when the price is greater than the minimum average total cost, it signals that firms can make a profit. This attracts new firms to enter the market, which increases supply and eventually pushes the price down to equal the minimum average total cost.

In a Perfectly Competitive Market, When the Price Is Greater