In the long run, perfectly competitive firms produce a level of output such that:

Question

Quizplus · Accepted Answer

In the long run, perfectly competitive firms aim to maximize profit by producing where marginal cost (MC) equals marginal revenue (MR), which is also equal to the market price (P). At the same time, firms need to ensure that they are operating at the minimum of average cost (AC) to ensure efficiency. Therefore, in the long run, perfectly competitive firms produce at the point where P = MC = minimum of AC.

In the Long Run, Perfectly Competitive Firms Produce a Level