A firm is producing output where MR=MC in a long-run situation. It is operating at the lowest possible average total cost, receiving the lowest possible price it can without going out of business, and earning no economic profit. Which market structure does it operate in?
A) monopoly
B) monopolistic competition
C) perfect competition
D) oligopoly

Question

Quizplus · Accepted Answer

This describes a firm operating in perfect competition. In perfect competition, firms produce where marginal revenue (MR) equals marginal cost (MC), operate at the lowest point of their average total cost curve in the long run, and earn zero economic profit due to free entry and exit in the market.

A Firm Is Producing Output Where MR=MC in a Long-Run