Long-run equilibrium for a perfectly competitive industry occurs when

Question

Quizplus · Accepted Answer

In perfect competition, firms will produce until price equals marginal cost (P=MC) in the short run, and will continue to produce in the long run as long as price equals both MC and average total cost (P=MC=ATC). This is because in the long run, firms can adjust their inputs to minimize costs and achieve maximum efficiency. Therefore, option A is the correct answer since it states that the long-run equilibrium occurs when price equals both marginal cost and average total cost.

Long-Run Equilibrium for a Perfectly Competitive Industry Occurs When