In the long run, in a price-taker market, the price of a good is determined primarily by the
A) average total cost of producing it.
B) decision of buyers in determining how much they are willing to pay for the good.
C) elasticity of supply.
D) number of firms in the industry.

Question

Quizplus · Accepted Answer

In a price-taker market, firms are price takers and cannot influence the market price. In the long run, the price is determined by the average total cost of production, as firms will enter or exit the market until economic profits are zero, meaning price equals average total cost.

In the Long Run, in a Price-Taker Market, the Price