When a purely competitive industry is in long-run equilibrium, which statement is true?
A)Average total cost is less than marginal cost.
B)Price and average total cost are equal.
C)Marginal cost is at its maximum level.
D)Marginal revenue is greater than price.

Question

Quizplus · Accepted Answer

In long-run equilibrium for a purely competitive industry, firms adjust their output so that price equals marginal cost (P = MC) and average total cost (ATC) is minimized. This means firms are making normal profit, where price equals average total cost (P = ATC).

When a Purely Competitive Industry Is in Long-Run Equilibrium, Which