Question

When a perfectly competitive firm is in long-run equilibrium, the firm is:

A) producing at maximum average total cost.

B) producing at maximum average variable cost.

C) producing at minimum marginal cost.

D) producing at minimum long-run average total cost.

Answer 1

Answer:

D) producing at minimum long-run average total cost.

Explanation:

In long run equilibrium for a perfectly competitive firm, Price = MC = Minimum ATC.

The long-run equilibrium point for a perfectly competitive market occurs where the demand curve (price) intersects the marginal cost (MC) curve and the minimum point of the average cost (AC) curve.