In long-run equilibrium, where does the perfectly competitive firm NOT produce?

Question

Quizplus · Accepted Answer

In long-run equilibrium, the perfectly competitive firm produces where P = MC = AC, which is at the lowest point on its long-run average cost curve. Therefore, option B is the correct answer. Option A is incorrect because this is where the firm maximizes its profit, but in long-run equilibrium, the profit is zero. Option D is incorrect because P = MC is not sufficient for the firm to break even in the long run, it must produce at the minimum of the long-run average cost curve. Option C is incorrect because if the firm produces at the highest point on its long-run average cost curve, it would be producing at a point where its cost is higher than necessary and would not be able to compete with other firms in the industry.

In Long-Run Equilibrium, Where Does the Perfectly Competitive Firm NOT