In long-run equilibrium, a competitive firm produces the level of output at which:

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In long-run equilibrium, a competitive firm produces the level of output where short-run average total cost and long-run average cost are at a minimum. At this level of output, the firm is operating at optimal efficiency and is able to make normal profits in the long run. Marginal cost being at a minimum is a condition for profit maximization in the short run, but not necessarily in the long run. Total revenue being at a maximum is not necessarily the same as maximizing profits, as profit also depends on costs. Diseconomies of scale ending is an important factor for firms to achieve optimal efficiency, but it is not the only condition for long-run equilibrium.

In Long-Run Equilibrium, a Competitive Firm Produces the Level of Output