In a perfectly competitive market,when the price is greater than the minimum average total cost for all firms:

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Quizplus · Accepted Answer

When the price is greater than minimum average total cost for all firms, firms are earning positive economic profits. This is because the price is high enough to cover not only the variable costs but also the fixed costs, leaving a surplus for the firms. Therefore, there is no reason for firms to exit, and the entry of new firms is not necessary since existing firms are making profits.

In a Perfectly Competitive Market,when the Price Is Greater Than