In a long-run competitive market equilibrium:

Question

Quizplus · Accepted Answer

In the long-run, firms in a competitive market will continue to enter or exit based on their ability to earn a profit. As firms enter or exit, the market supply curve will shift, and price will adjust until it is equal to the minimum average total cost of production for each firm. At this point, firms will earn normal profits (zero economic profit). Therefore, in the long-run equilibrium, price equals the minimum of average total cost.

In a Long-Run Competitive Market Equilibrium