In the long-run equilibrium of a competitive market,the number of firms in the market adjusts so that all of the market demand is satisfied.At what price would this happen

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Quizplus · Accepted Answer

In the long-run equilibrium, firms earn zero economic profit. At the minimum point of the average total cost curve, firms are producing at the most efficient point of production, where they are minimizing the cost of each unit produced. If the market price were lower, firms would exit the market since they would not be able to cover their total costs. If the market price were higher, new firms would enter the market due to the potential for economic profit. Therefore, in the long-run equilibrium, the market price would be equal to the minimum point on the average total cost curve.

In the Long-Run Equilibrium of a Competitive Market,the Number of Firms