In the above figure, The cost curves of a typical perfectly competitive curve are show. What will price settle at in the long run? This graph illustrates the relationship between price and cost per unit against quantity produced per day, showcasing the economic concepts of Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC).**Axes:**- The horizontal axis represents the "Quantity (units per day)" ranging from 0 to 50 units.- The vertical axis shows the "Price and cost (dollars per unit)" from $0 to $20.**Curves:**1. **Marginal Cost (MC)**: The MC curve initially decreases, reaches a minimum point, then increases as quantity increases. It intersects the ATC curve at its lowest point and rises steeply thereafter. 2. **Average Total Cost (ATC)**: The ATC curve is U-shaped. It decreases initially, reaching a minimum at a point where it intersects with the MC curve, and starts increasing again.3. **Average Variable Cost (AVC)**: Similarly, the AVC curve is also U-shaped, lying below the ATC curve. It decreases, reaches a minimum, and then increases. **Key Points:**- The intersection point of the MC and ATC curves represents the minimum average total cost.- The MC curve intersects the AVC curve at its minimum, indicating the point of lowest average variable cost.These curves are fundamental in understanding cost structures within microeconomics and are important for determining optimal production levels.

In a competitive firm due to free entry and exit the firm earns normal profit in the long run.

Answered: In the above figure, The cost curves of…

In the above figure, The cost curves of a typical perfectly competitive curve are show. What will price settle at in the long run

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the above figure, The cost curves of a typical perfectly competitive curve are show. What will price settle at in the long run?

This graph illustrates the relationship between price and cost per unit against quantity produced per day, showcasing the economic concepts of Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC).

**Axes:**
- The horizontal axis represents the "Quantity (units per day)" ranging from 0 to 50 units.
- The vertical axis shows the "Price and cost (dollars per unit)" from $0 to $20.

**Curves:**
1. **Marginal Cost (MC)**: The MC curve initially decreases, reaches a minimum point, then increases as quantity increases. It intersects the ATC curve at its lowest point and rises steeply thereafter.

2. **Average Total Cost (ATC)**: The ATC curve is U-shaped. It decreases initially, reaching a minimum at a point where it intersects with the MC curve, and starts increasing again.

3. **Average Variable Cost (AVC)**: Similarly, the AVC curve is also U-shaped, lying below the ATC curve. It decreases, reaches a minimum, and then increases.

**Key Points:**
- The intersection point of the MC and ATC curves represents the minimum average total cost.
- The MC curve intersects the AVC curve at its minimum, indicating the point of lowest average variable cost.

These curves are fundamental in understanding cost structures within microeconomics and are important for determining optimal production levels.

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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