Which of the following characterizes long-run equilibrium in perfect competition? A) P = MC = ATC B) P = MC MC = ATC D) P = MC ATC

Question

Which of the following characterizes long-run equilibrium in perfect competition?
A) P = MC = ATC
B) P = MC < ATC
C) P > MC = ATC
D) P = MC > ATC

Quizplus · Accepted Answer

In perfect competition, long-run equilibrium occurs when P (price) equals MC (marginal cost) and ATC (average total cost) at their minimum point. This is because in the long run, firms can adjust their inputs and outputs to minimize their costs and earn only normal profits. Therefore, the correct choice would be A, which states that P = MC = ATC.

Which of the Following Characterizes Long-Run Equilibrium in Perfect Competition