When a competitive firm sees the price fall below the minimum possible average total cost in the long run, then it will decide that it could do better by moving to a different industry.

Question

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In the long run, if a competitive firm sees the price fall below its minimum possible average total cost, it cannot cover its costs, implying it would indeed do better by moving to a different industry where it can potentially cover its costs and earn a profit.

When a Competitive Firm Sees the Price Fall Below the Minimum