Principles of Microeconomics / Unit 7 MIC 0625 short lesson, about 20 seconds
Long-Run Equilibrium: P = MC = Minimum ATC
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The idea
In long-run equilibrium, price equals marginal cost and equals minimum average total cost. Every firm earns zero economic profit, a normal profit, and nobody has reason to enter or leave.
In practice
The price sits at the bottom of every firm's average cost curve.
Where people slip
Zero economic profit is not failure. Owners are paid exactly what their resources would earn elsewhere.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Unlocks
- 0626Tracing a Demand Increase to the Long Run
- 0628A Cost Change in the Short and Long Run
- 0630Constant-Cost Industry
- 0634Productive Efficiency in Competition
- 0635Allocative Efficiency: P = MC
- 0719Monopoly Against Competition on the Same Curves
- 0833The Four Structures on One Table
- 1624Supply, Entry and Exit
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