In long-run equilibrium, a perfectly competitive firms produces at the output level at which:

Question

Quizplus · Accepted Answer

In the long-run equilibrium of a perfectly competitive market, the firm is producing at the point where its average total cost (ATC) is minimized. At this point, the firm is operating at the lowest possible cost per unit of output, allowing it to sell its products at the market price and earn a normal profit. This is because in a perfectly competitive market, if a firm were producing at a higher cost than its competitors, it would not be able to survive in the long run. Therefore, producing at the point where ATC is minimized is the most efficient way for a firm to stay competitive in the long run.

In Long-Run Equilibrium, a Perfectly Competitive Firms Produces at the Output