In long-run equilibrium,a competitive firm produces where P = MR = MC = minimum ATC and earns normal economic profits.

Question

Quizplus · Accepted Answer

In the long-run equilibrium, a competitive firm produces where the price (P) is equal to the marginal cost (MC) and also equal to the minimum average total cost (ATC). Because in the long-run, there are no barriers to entry or exit, firms will only earn normal profits. Therefore, the statement is true.

In Long-Run Equilibrium,a Competitive Firm Produces Where P = MR