In a perfectly competitive market,if market price is lower than the average total cost of production,________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will continue to enter until the market price falls to the level of the average total cost of production, at which point economic profits will be zero. If the market price falls below the average total cost of production, existing firms will incur losses and may be forced to exit the market in the long run. Therefore, in this case, existing firms will leave the market.

In a Perfectly Competitive Market,if Market Price Is Lower Than