The result that perfectly competitive firms produce at the lowest per-unit cost is derived from the assumptions of

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Quizplus · Accepted Answer

The assumption of free entry and exit ensures that in the long run, firms can easily enter or exit the market depending on profits. This means that in the long run, firms will only be able to earn normal profits, which occurs when firms produce at the lowest per-unit cost. Therefore, the result that perfectly competitive firms produce at the lowest per-unit cost is derived from the assumption of free entry and exit.

The Result That Perfectly Competitive Firms Produce at the Lowest