In the long-run in a perfectly competitive market, why do firms produce at the minimum of the ATC curve? a.Because when firms are producing at the minimum of the ATC, the difference between Price and ATC is the largest, thus maximizing profit. b.Entry and Exit forces the profits to zero, which can only occur when price is equal to the minimum of the ATC curve. c.Because when firms are producing at the minimum of the ATC, the difference between Price and MC is the largest, thus maximizing profit. d.The minimum of the ATC curve is also the minimum of the MC curve, thus increasing output is not profitable.

Answered: In the long-run in a perfectly…

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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In the long-run in a perfectly competitive market, why do firms produce at the minimum of the ATC curve?

	a.	Because when firms are producing at the minimum of the ATC, the difference between Price and ATC is the largest, thus maximizing profit.
	b.	Entry and Exit forces the profits to zero, which can only occur when price is equal to the minimum of the ATC curve.
	c.	Because when firms are producing at the minimum of the ATC, the difference between Price and MC is the largest, thus maximizing profit.
	d.	The minimum of the ATC curve is also the minimum of the MC curve, thus increasing output is not profitable.