Question

The minimum feasible​ long-run average cost for firms in a perfectly competitive industry is ​$48 per unit. If every firm in the industry currently is producing an output consistent with a​ long-run equilibrium, calculate the marginal cost incurred by each firm and the market price. Marginal cost is ​$ nothing and market price is ​$ nothing. ​(Enter your responses as whole​ numbers.)

Answer 1

Answer:

Marginal cost is ​$48 and market price is ​$48.

Explanation:

in a perfectly competitive industry, price = average cost. At the same time, average cost = marginal cost. So marginal cost = price.

In a perfectly competitive industry, all producers are making 0 economic profit (which is not the same as 0 accounting profit). Since you are making 0 economic profit, that means that your marginal costs will equal the selling price. This is also the point where the firms are maximizing their accounting profits.