The long run supply curve for a perfectly competitive firm is the segment of the marginal cost curve that lies above the average total cost curve.

Question

Quizplus · Accepted Answer

In the long run, a perfectly competitive firm can enter or exit the market, which means it can adjust its production to minimize its costs. Therefore, in the long run, the firm will produce at the minimum point of its average total cost curve, where marginal cost equals average total cost. Hence, the long run supply curve for a perfectly competitive firm is the segment of the marginal cost curve that lies above the average total cost curve.

The Long Run Supply Curve for a Perfectly Competitive Firm