In a competitive industry with identical firms,long-run equilibrium is characterized by: A) P min ATC. B) P

Question

In a competitive industry with identical firms,long-run equilibrium is characterized by:
A) P > min ATC.
B) P < AVC.
C) MR = MC = min ATC.
D) MR < P.

Quizplus · Accepted Answer

In the long-run equilibrium of a perfectly competitive market, all firms end up producing at the minimum point of their long-run average total cost curve (min ATC). At this point, the firm earns normal profits (zero economic profits), which means that marginal revenue (MR) is equal to marginal cost (MC) and also equal to the market price of the good. Therefore, the correct answer is C, MR = MC = min ATC.

In a Competitive Industry with Identical Firms,long-Run Equilibrium Is Characterized