For a perfectly competitive firm, the long-run supply curve is the long-run average cost curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms make zero economic profit in the long run. Therefore, the long-run supply curve for a perfectly competitive firm is its long-run marginal cost curve, which is equivalent to its long-run average cost curve. This is because, in the long run, all costs are variable and the firm has the flexibility to adjust its inputs to minimize its costs. Thus, the long-run supply curve for a perfectly competitive firm is equal to its long-run average cost curve.

For a Perfectly Competitive Firm, the Long-Run Supply Curve Is