When a firm in a price-taker industry is in long-run equilibrium, the market price equals
A) marginal cost but may be greater or less than average total cost.
B) both average total cost and marginal cost.
C) average total cost but may be greater or less than marginal cost.
D) marginal revenue but may be greater or less than both average total cost and marginal cost.

Question

Quizplus · Accepted Answer

In long-run equilibrium, a price-taker firm's market price equals both average total cost and marginal cost, ensuring zero economic profit.

When a Firm in a Price-Taker Industry Is in Long-Run