In long-run equilibrium,every perfectly competitive firm

Question

Quizplus · Accepted Answer

In long-run equilibrium, a perfectly competitive firm chooses its plant size and output level to operate at minimum long-run average total cost. This is because, in the long run, firms have the flexibility to adjust their plant size, which enables them to minimize their average total cost. Operating at the minimum long-run average total cost ensures that the firm is efficient and competitive, and it can survive in the long run. Firms that operate at a higher average total cost will not be able to compete with other firms, and they may not survive in the long run. Therefore, choice C is the correct answer.

In Long-Run Equilibrium,every Perfectly Competitive Firm