In the long run in perfect competition,firms will operate at

Question

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In perfect competition, firms are price-takers and there are no barriers to entry or exit. As a result, in the long run, firms will only be able to earn normal profits, i.e. just enough to cover all their costs including an opportunity cost for the owners of the business.

Since firms are operating in a market with many other perfectly competitive firms producing homogenous products, if a firm charges more than the market price, it will not be able to sell anything. Consequently, in the long run, all firms in a perfectly competitive market will produce at minimum average total cost (ATC) in order to maximize profits. Any deviation from this would lead to the firm earning less than the normal profit or incurring losses, which would eventually force the firm out of business.

Thus, the best choice is A) minimum average total cost.

In the Long Run in Perfect Competition,firms Will Operate at