The following figure shows equilibrium at the industry and firm level. Figure 23.6 In the figure,
S₁, S₂, S₃are the market supply curves.
D₁ and D₂ are the market demand curves.
MC is the marginal cost curve of the firm.
MR₁ and MR₂are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
According to Figure 23.6, in the long run, the firm:

Question

The following figure shows equilibrium at the industry and firm level. Figure 23.6

In the figure,
S₁, S₂, S₃are the market supply curves.
D₁ and D₂ are the market demand curves.
MC is the marginal cost curve of the firm.
MR₁ and MR₂are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
According to Figure 23.6, in the long run, the firm:

Quizplus · Accepted Answer

In the long run equilibrium of the firm, it produces where its marginal cost (MC) is equal to its marginal revenue (MR), which is given by the intersection of the MR₂ curve and the MC curve. This occurs at a quantity of 9 and a price of $1. At this point, the firm is making normal profits, as its average total cost (ATC) is also equal to $1. Therefore, choice B is the correct answer. Option A and C are incorrect because they have either the wrong quantity or the wrong price. Option D is incorrect because it refers to the long run equilibrium of the industry rather than the firm. Option E is also incorrect because the firm is making normal profits, so it has no reason to shut down.

The Following Figure Shows Equilibrium at the Industry and Firm